Australia
The Australian dollar has made gains this week helped by some slightly better than expected second tier data. NAB business conditions and confidence both came in stronger than forecast, with business conditions now back to around pre-GFC levels and above the long run average. Westpac consumer confidence for July also improved printing at +0.4%. The index has a long way to go however as the three months prior to this saw consecutive declines. Overall the index isn’t giving great signals about the outlook for consumer spending. Yesterday we also saw the release of consumer inflation expectations from the Melbourne Institute which jumped from 3.6% to 4.4%. Next week should be more interesting with the RBA minutes set for release along with employment data.Economies of Note

Overview
The G20 meeting over the weekend failed to have any dramatic impact on financial markets. The communique made it clear they are not all on the same page when it comes to climate change and trade, with the group issuing dissenting conclusions for the first time. Cracks between the US and the rest of the G20 could not be glossed over and the potential for a trade war on steel is certainly there. It looks like the US made very clear it’s concerns about the glut of Chinese steel and the final agreement mentioned “legitimate trade defence instruments”.  It also demanded concrete policy solutions by November from a G20 sub-body set up last year to examine steel market imbalances. US employment data on Friday highlighted the conundrum many western economies have found themselves in recently.FX Update: Groundhog Day for most New Zealand dollar pairings

Australia
The Australian dollar was aggressively sold lower to 0.7570 after a dovish  RBA on Tuesday, as expected , left rates unchanged  retaining its neutral monetary policy stance and reiterated risks associated with a rising AUD. However it enjoyed a brief rally a day later heading back to the 0.7630 region But for the last two days has resumed its southward track, not helped by some pretty average June services PMI data out of China.  The Aussie remains under pressure now trading around 0.7578, not far from the weekly low set on Wednesday at 0.7570, this is despite strong local data released at yesterday which showed the local trade balance for May recorded a surplus of 2.471 billion in seasonally adjusted terms, more than doubling market’s forecast, helped by a sharp rebound in exports, up by 9% in the month.Economies of Note

Overview
A short week this week and lighter trading is expected with US markets closed for the July 4th Independence Day holiday tonight. However we also have a raft of economic data being released over the next few days, culminating in the US Non-farm payroll figure for June out on Friday night.  Also of note are the Fed minutes for the June meeting released on Wednesday, then the private payroll figure (ADP jobs report) coming out on Thursday. Away from the US, the RBA has its rate decision later this afternoon and a monetary report will be released by the ECB on Thursday. There is plenty of information to drive volatility on currency and equity markets. While the US Fed started its tightening cycle back several months , a point to watch is the more hawkish tone now emerging from some of the other Central banks, as a greater focus on financial stability risks emerges.FX Update: The RBA to draw focus

Australia
The Australian dollar ends the week in better form than at the start. It is now trading around 0.7682, after a 3 month high of 0.7686 overnight, up considerably from the week’s low of 0.7561, with the tone more positive and swinging to a “buy-the-dips” story helped by the firming iron price. Aussie fundamentals appear to be still a little mixed but jobs data released yesterday showed a further increase in vacancies, and this more positive tone should carry the AUD to threaten 0.7700 over the next few days. However US data next week will be critical to future direction and it will be hard for the AUD to extend much beyond the 0.7700 level ahead of the US Non-farm payroll figure next Friday.Economies of Note

Overview
Markets have been mostly range bound at the start of the week, with little to cause any major changes in current trends. Although US data in the form of Durable goods data was soft overnight, raising some questions over the resilience of US growth, the Fed desire to normalise interest rate policy continues which has helped the USD to hold onto gains against its main trading partners especially the JPY and EUR. Commodity prices remain choppy but the overall negative trend for oil prices continues and both WTI and Brent oil are now in a bear market, prices having fallen over 20% from peaks earlier this year.FX Update: The NZD remains well supported

Overview
A quiet start to the week with relatively little economic data overnight to influence markets. Overnight US equities continued to surge higher with both the S&P500 and Dow indices rising to new record highs. On commodity markets oil continued to weaken, with WTI crude down 1.2% to US$44.20/brl continuing a four week decline as US drillers add oil rigs, circumventing attempts by OPEC to rebalance an oversupplied market. Also making news last night was the long anticipated news of an Australian credit downgrade by rating agency Moody’s, who dropped the credit rating of the four Australian banks, ANZ, Westpac, CBA and NAB on concerns over “elevated risks within the household sector due to high levels of indebtedness” i.e. Mortgages.FX Update: NZD range bound ahead of Thursday’s RBNZ meeting

Australia
The AUD traded higher yesterday, hitting a two month high of 0.7631 against the USD on much better than expected jobs data. Figures showed that May unemployment fell to 5.5% exceeding expectations of 5.7%. The data was encouraging as it showed that the jobs growth was all in full time employment with 52,100 full-time positions added to the economy while 10,100 part-time ones fell away. This defied previous forecasts of an increase of only 10,000 new jobs.Economies of Note

Overview 
Markets have opened the week with a more stable tone, with little in the way of major data releases, as they wait for this week’s main event, the Fed meeting on Thursday. Expectations are for a rate hike of 0.25%, but concentration will be on the accompanying rhetoric and if there is a pointer to another one or two rate increases later in the year. An indication of two further rate hikes would put the market on the back foot as while another hike is also widely expected a second hike is not currently priced-in and increased probability of such an event would likely see a jump in USD values. The fallout from the UK continues with the Conservative government looking at six-and-sevens as it struggles to create some order from the political chaos.FX Update: Central banks in focus

Australia
After Tuesday’s meeting where the RBA kept rates on hold as expected at 1.5% the AUD has rallied back over 0.7500 against the USD supported by a better than expected GDP result for the March quarter. Data released showed that the economy grew by an anaemic 0.3% in the first quarter, but this was better than suggested after the poor balance of payments figure released on Tuesday. After breaking through 0.7500 the AUD extended gains to a month high at 0.7565, has now consolidated around the 0.7540 level. The RBA reaffirmed its expectations of ongoing strengthening economic growth in its Tuesday statement even though year-on-year growth has slowed from 2.4% to 1.7%, placing GDP growth close towards the bottom of the 2-3%  RBA target range.Economies of Note