Australia: Yesterday the RBA released its Board Minutes from the July meeting. The Minutes had more of a “dovish” tone, and removed the statement “this outlook suggested that further tightening in monetary policy would be necessary at some point”, as the Bank had previously noted.

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The Minutes also confirmed concerns in relation to Greece and the European sovereign debt, saying that ‘An uncontrolled default could be damaging for the global economy” and the risk for this “looked more significant than had been the case a few months ago”.

The RBA expects our local economy to continue to grow with mining investment remaining strong. While the question on the next move by the RBA on interest rates remains divided, the futures market is pricing in a 25 basis point cut by the
Q1 2012, and the next CPI release will be keenly watched.

A weaker USD and improved risk appetite saw base metals post gains with copper higher by 1.5%, aluminium 2.1% and nickel 1.4%. Gold actually fell 0.1% to be trading just above US$1600 per ounce while oil rose 1.6% to US$97.50 a
barrel.

Today will see some second tier data releases locally and we would expect the AUD to remain supported today from overnight leads.

Majors: Overnight in Europe the EUR rallied as talks of three options for the “Greek bailout” are being considered. This was seen as a positive and equity markets rallied.

On the data front, the German ZEW Survey for July rose to 90.6 from 87.6 beating 85.0 expected, however Economic
Sentiment deteriorated to -15.1, from –9. In the US overnight President Obama endorsed the US $3.75 trillion debt reduction plan proposed by the bipartisan six Senators, the Plan combines spending cuts and tax
increases to produce US$3.75 trillion in savings.

US Housing starts for June reported a rise of 14.6% much stronger than the 2.7% result expected with building permits for June up 2.5%. In the UK, Bank of England Minutes are released for the July Board meeting, where the official rate was left unchanged at 0.50%. Europe has Consumer Confidence numbers and German Producer Prices due. In the US, MBA
Mortgage Applications and Existing Homes Sales are due.
Economic Calendar
Nab Business Spending
RBA Foreign Exchange Transaction
US House Price Index
US Initial Jobless Claims

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