Australian Dollar Forecast Dec 1

Positive data released out of the US overnight was overshadowed by the news out of Dubai; with the Dubai World creditors and United Arab Emirates central bank saying that they will support the regional banks and absorb some of the losses to help limit the fallout of Dubai's debt problem.

Today's RBA announcement is expected to result in a 0.25% increase in the interest rate, lifting it to 3.75%.

13 of 14 economists that were surveyed by AAP predicted that interest rates would rise, with many believing that an increase is already priced into the market.

Should the interest rates not increase this afternoon, then we could see the AUD fall after the announcement.

Majors: The USD declined against most currencies overnight although these losses were limited due to the caution  surrounding Dubai.

Investors appeared hesitant to pile too heavily into riskier currencies ahead of this week's US and Euro-zone economic data as well as the interest rate decisions from several major central banks.

 Overnight we saw the release of US Chicago PMI for November which showed that the manufacturing activity increased to 56.1, more than the increase to 53.0 which were what markets were expecting.

Tonight will see the release of US Consumer Confidence but many will be waiting for the release of non-farm payrolls on Friday to gauge the world economy's road to recovery.

Euro-zone CPI estimate, which increased for the first time in 7 months, by 0.6% has caused the EUR/GBP to open lower this morning after touching an overnight low of 1.4973.

The European Central Bank will also announce their interest rate decision this Thursday, and although it isn't expected to adjust rates, strong attention will be paid to the statement for clues as to when the eventual tightening of monetary policy could occur.

 There was also a raft of economic data out of the UK overnight which was their mortgage approvals jump to 57.3k, which is an 18 month high.

Although this indicates that the economy is moving closer to the end of their recession, the UK consumer confidence survey for November unexpectedly fell to -17 which is the

first drop this year.