Bell FX Currency Outlook:

Successful bond auctions in Italy and Spain, coupled with positive comments from ECB president Draghi
improved market sentiment overnight.

Australia: The Aussie dollar was firmer against the Greenback touching a high of USD1.0370 to open around USD1.0330 this morning, while it is back below EUR0.8100 against the Euro. The S&P 500 added 0.15% to 1294.38, the Dow was up 0.2% to 12472 whilst the FTSE lost 0.15% to close at 5662.42.

Data out of China yesterday showed December inflation eased to 4.1% y/y from November's 4.2%, 0.1ppt above market expectations.

PPI inflation also declined to a 25 month low of 1.7% y/y. Easing inflation concerns and a slowing in domestic demand could see a cut to the RRR before Chinese New Year. The Euro rallied almost 1% as the market was reassured by statements from ECB president Draghi that liquidity operations had been successful, providing "a substantial contribution to improving the funding situation of banks, thereby supporting financing conditions and confidence".

Also adding to sentiment were comments that some recent survey indicators show tentative signs of stabilization of economic activity at low levels. Markets however, remain mindful of possible further bad news in the short term. With a lack of data to be released in Australia today, we expect a fairly quiet trading session.

Majors: Weaker economic data out of the US tempered gains as Retail Sales disappointed slightly. Retail Sales rose 0.1% m/m vs. an expected +0.3% m/m, held down by falls in fuel and department store sales.

US Jobless claims also rose overnight by 24k to 399k. Nuclear concerns have seen the US continue to push for sanctions on Iranian oil exports.

The EU has delayed their decision by 6 months overnight which saw oil prices retreat. WTI fell 2.0% to USD 98.83 per barrel while Brent fell 1.4% USD 110.72 per barrel.

Economic Calendar
13 JAN EUR Euro-zone Trade Balance NOV
UK PPI Input / Output DEC
US Trade Balance NOV
US Uni of Michigan Confidence JAN