Australia: The AUD is trading just below USD1.0500 this morning, as the investors gain confidence, and continue to sell of the USD. The positive equity markets and the weaker USD also helped commodity prices (and thus the AUD) with oil and gold both higher. While gold finished 1.1% higher at USD$1,765 an ounce; oil was the real winner, gaining 2.7%, up to USD87.68/brl.

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In the past five trading session the Australian stock market has outperformed its European counterparts; gaining 11.2%, compared to the Euro Stoxx 50 which is only up 3.2%. This discrepancy is mainly due to the markets view on the relative growth for the regions; with the prospect of Australia’s growth much higher than that of Europe.

Today during our local trading session see’s the release of the RBA’s August minutes from their interest rate meeting. While the minutes will not mention any of the recent economic uncertainty due to the fact that these minutes are from 2 weeks ago; it will give the market further indication on where the RBA’s mindset is, and what factors may influence any future movement.

Majors: The Swiss Franc continued to influence the currency markets last night as speculation that the Swiss National Bank (SNB) will implement more aggressive measures to hold the local currency from rising persisted.

The new rumour circulating is that the SNB might introduce a floor level or peg for the EUR/CHF to curb the CHF’s gain against the EUR and spread the gain amongst other currencies. This saw the EUR gain 2.5% against the CHF; with gains in the EUR also seen against the USD, up more than 1%.

Europe will tonight be the focus in the offshore session, with Q2 GDP data released for Germany and the Euro-zone; with expectations of a
slowing from Q1. Weaker US data had little effect on the positive markets, with the Empire Manufacturing Data released last night, disappointing the market. Expectations were for a flat result, but instead it came in much lower, down 7.7.

Many believe that a weaker result may have already been priced in to the market, given the recent poor manufacturing results around the region. Housing data out in the US tonight for July, including Housing Starts, will be a good indication on how the housing sector is
faring during these uncertain times.

Economic Calendar
RBA Board August Minutes
China Conference Board Leading Index
US Housing Starts
US Industrial Production