Bell FX Currency Outlook: The AUD traded in a fairly tight range overnight as the USD continued to maintain its recent strength against the major currencies.
Australia: The AUD seems to be consolidating after the fall over the last week of four cents against the USD. With equity markets in the major economies continuing to remain firm and the prospect that continued quantitative easing from the US Federal Reserve will probably last at least until the end of 2013, the USD continued its firmness of the last several
days.

With a firmer housing market in the US and the S&P 500 equity index hitting another new high in nine of the last ten days, the US
economy seems to gaining steam although there are signs that some sectors are starting to lag. Industrial production in the US dipped last month by the most in eight months while manufacturing in the New York region shrank in May as factories received fewer orders.

With commodity prices in general weakening and the USD holding its strength of late, the AUD looks potentially vulnerable over the next several weeks if commodity prices continue their downward path. Today in Australia we will see some data from the RBA on FX transactions for April.

Majors: The US sequester which has produced mandatory spending cuts and tax increases earlier in 2013 has had an effect on estimates for the US fiscal budget for this year with predictions that the deficit will only be 4% of GDP as compared to 7% last year. The projected deficit of "only" USD642bn this year, the lowest in the last five years, is also a contributing
factor in the strength of the USD.

GDP in the EU decreased in Q1 by 0.2% which helped weaken the EUR overnight although this was an improvement on the decline of 0.6% from the previous quarter.

Outgoing Bank of England Governor King said recovery in the UK economy was "in sight" which aided the GBP. Tonight in the US we will see a slew of data for April including building permits, housing starts and CPI numbers.

Economic Calendar
16 MAY AU RBA Foreign Exchange Transaction
JN Gross Domestic Product
NZ NZ Government Budget