Australia: What a rollercoaster ride the past 24hrs have been for currency markets, starting yesterday with the RBA leaving the official cash rate unchanged at 4.50%. Despite the fact that the majority of the market had been expecting a rate increase, the RBA Board decided to keep the official rate unchanged, sparking a fall of over 1 cent in the AUD immediately after the announcement. The brief
dip in the AUD following the RBA announcement was short lived given the huge support by investors over the past month for higher yielding currencies with reports Central Banks around the world have been increasing their reserves of commodity backed currencies. The accompanying statement from the RBA remained hawkish with a rate hike still expected before the year is out. Base metals traded higher across the board with copper up 1.4% and aluminium, nickel, lead and zinc gaining 0.7%, 2.4%, 1.5% and 3.7% respectively. Gold set a new record high of US$1,340.30 an ounce on a weaker US dollar. With very good support on dips and a positive lead from equity markets we expect the AUD to push higher today.

Majors: US equity markets pushed up strongly overnight, all gaining about 2%, following better than expected data out of the US and Bank of Japan announcements. The BoJ stepped into the spotlight by announcing additional easing measures including a new QE program this was seen as positive action by the market. The markets are taking comfort from the fact that policy makers in Japan are prepared to provide further stimulus to the economy and this is driving asset prices higher. In the US overnight non-manufacturing ISM data was released. The result came in at a better-than-expected 53.2, up from 51.5, providing further support for the market.