After a week of conjecture and innuendo, China's official GDP release provided a degree of solace across global markets on Friday, recording annual growth of 7.6 percent in the second quarter. While we've learnt China's growth may not be the gravity-defying phenomena it has been in recent years, the latest round of data outpaced some of the more alarming figures bandied about and hardly shows a country on a path to economic obscurity.

Feedback from China had been both a hindrance and a source of support for commodity-related currencies over the week. Long-side positioning on the Australian dollar was cut back ahead of China's growth data on Friday, which ultimately exacerbated a reversal ensuing the release. Contributing to the push-and-pull effect for the Aussie dollar was also U.S quantitative easing expectations, which provided some latter week support for U.S equities and risk currencies alike.

Nonetheless, after a fairly turbulent week and a string of fresh highs against the Euro, the local unit managed to squeeze out a moderate weekly gain against the greenback by Fridays close. 

Apart from the usual data and headline risk abroad, the week ahead will see the RBA policy meeting minutes dominate an otherwise quiet week on the local data front. In light of the recent less-than-inspiring employment data, the minutes may need to display a direct link between the likelihood of further rate cuts and deterioration in employment to spark a material shift in policy easing expectations.

Nevertheless, market participants will scour through for any clues which as always will be influential on short-term price action. In short, although the minutes may show the RBA have the ample breathing space to further ease monetary policy, the full impact of previous easing initiatives has yet to filter through the economy, suggesting the board will maintain a steady course while further assessing conditions both locally and abroad.

The U.S week ahead will once again see stimulus expectations take centre stage with Fed Chairman Ben Bernanke due to provide testimony to congress on Tuesday and Wednesday, where it's expected he will highlight the delicate fiscal balance required to carefully reduce budget deficits, while avoiding the 'fiscal cliff' as a result of sharp cuts to government spending.

While we may not hear direct hints of near-term plans to embark on further easing initiatives, we expect Bernanke to reiterate such measures remain in the Fed's armoury. The release of consumer price data on Tuesday may also add further spice to the QE3 argument with headline inflation expected to moderate to a yearly rate of 1.6 percent in June from a previous 1.7 percent, while core inflation will probably fall to 2.2 percent on year from 2.3 percent.

Also in focus this week are data points on the health of U.S retailers, Industrial production, manufacturing, and housing. Corporate earnings from industry heavy weights Citigroup, Goldman, Google and Microsoft (to name just a few), will undoubtedly impact overall sentiment.

Across the Atlantic, it seems for every major hurdle jumped, a new and potential fatal one is waiting in the wings to place further stress on the Euro.

Last week was no different with the Euro forging fresh 2-year lows against the greenback while chalking up new euro-era lows against the Aussie dollar before a late week reversal. Europe's economic plight suffered another blow last week after the German Constitutional court further delayed the ratification of Europe's permanent bailout fund, the European Stability Mechanism.

In what could be lengthy delays, opponents of the ESM are attempting to foil the permanent rescue fund, while ironically European leaders are busily putting the fund to work in an effort to shore-up confidence in the region. Although leaders remain optimistic of an eventual successful result, it remains another potential source of contention and uncertainty at such a critical time.

Expect the usual headlines and conjecture to dominate the proceedings next week with Euro-zone CPI and ZEW survey for both the Euro-Zone and Germany thrown in for good measure. Peripheral debt markets may also provide direction for broader sentiment with auctions from Greece, Portugal and Spain. After agreeing to an initial instalment of EUR30billion to recapitalise Spain's ailing banking sector, Finance Ministers will reconvene on Friday to thrash out the finer points of Spain's bailout with the total figure and terms expected to be finalised.

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