Bell FX Currency Outlook: The Australian Dollar remains steady above USD 0.9600 this morning after a very volatile day yesterday and then an offshore session in which financial markets showed genuine skittishness as only they can at times.

Australia: The AUD hit a 19 month low at 0.9528 as the USD initially surged on rising bond yields but later in last night's session, USD/JPY fell 1.5% as the DXY Index traded south below 84.10 and the AUD staged a comeback of sorts from the above-mentioned low after huge sell orders
were triggered early Wednesday.

Financial markets were very volatile and the price movements of the past 24 hours, and potentially the next few weeks, will intrigue. The US 10-year yield increased to a 14 month high of 2.23% which seemed an excessive reaction to consumer confidence figures that were not really a surprise.

The fly in the ointment if you will is with the Fed's "tapering" which is the new "in" word. It's hard to understand the true state of the US economy.

Strong and improving economic data and stock markets are a no-brainer right now but it doesn't seem fair to conclude economic improvement is a certainty. Hence this increase in yields was sufficient to knock sentiment in the US stock market and the Dow gave way.

Locally, today's Private New Capital Expenditure (CAPEX) report for the March quarter is probably the most important release of the week as it is an important ingredient into the calculation of business investment in the GDP report released on the 5th May.

Majors: Looking at the majors, G10 and emerging market (EM) currencies traded in opposite directions. G10 currencies reversed course
and strengthened against a weaker USD. A theme seems to be developing towards USD, EUR and GBP strengthening and currencies that have received strong flows in the last 3 years to be waning (AUD, KRW, SGD).

Yesterday, the IMF released its updated Economic Outlook and in the report, lowered forecasts for economic growth in China this year to 7.75% from April's forecast of 8%.

Meanwhile, the Bank of Thailand reduced its policy rate by 25bp to 2.5% citing the need to provide a cushion against downside risks from slowing regional expansion led by China and a possible delay in the public infrastructure investment program.

This is the first cut since October 2012. In the US, Fed Bank of Boston President and voter on the FOMC Eric Rosengren said "significant
accommodation remains appropriate at this time."
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