Australia: Another round of USD weakness has seen the higher yielding currencies, such as the AUD, NZD and NOK, all make gains. The AUD is likely to remain relatively subdued today with the only local data release, the Average Weekly Earnings data, unlikely to have much of an effect on the market.

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The AUD has made up some solid ground since the recent move back below parity. And while the risks related to the US and Eurozone economies are still very real, the positive outlook for the Australian economy and our relatively high interest yields mean that AUD asset purchases remain a very attractive proposition for investors.

As a result, it seems likely that the AUD will continue to remain strong over the medium term, particularly if the Chinese economy stays strong.
Majors: Further developments in Europe overnight with the Swiss National Bank announcing measures to try and weaken the CHF. The CHF has strengthened by close to 30% against the USD this year and the Swiss central bank has become increasingly concerned about the effect of such a strong currency on the Swiss economy.

The SNB stopped short of pegging the CHF to the Euro, but announced emergency measures to try and weaken the CHF. Despite the SNB’s efforts, the CHF strengthened further against both the Euro and the US dollar. Financial markets were also unimpressed with the Merkel-Sarkovsky plan to introduce a tax onfinancial market transactions. The markets had been looking to theGerman Chancellor and the French President to announce some bolder moves to try and curb the growing Euro-zone debt crisis.

Economic Calendar
18 AUG AU Average Weekly Wages MAY
EU Construction Output JUN
UK Retail Sales JUL
US CPI JUL