Bell FX Currency Outlook: The Australian Dollar has risen through USD1.0400 with currency markets sensing the FOMC will announce a third round of quantitative easing tomorrow night amidst news Moody's may consider downgrading America's credit rating.
Australia: Equity markets finished higher and the iron ore price rose dramatically. It was particularly the latter that helped the AUD gain another US cent. US dollar weakness was evident with talk of QE3 announcements and that Moody's are honing in on what they refer to as the 'fiscal cliff' and the need to achieve resolution in the new Congress.

Moody's said they want Congress to agree to economic policies "that produce a stabilisation and then downward trend in the ratio of Federal debt to GDP over the medium term." The mood was assisted further with positive expectations about tonight's German Constitutional Court announcement on the legality of the European Stability Mechanism (ESM) and fiscal treaty.

Chinese Premier Wen Jiabao also aided sentiment by promising the government would take more action to support Chinese growth. Locally, yesterday's NAB Business Survey for August reported a rise in Business Conditions, in line with the long run average and consistent with GDP of 3.25%.

However confidence was reported as down and this was driven by a significant fall in mining. The good news is there was improvement in other sectors, amongst them, retailing.

In Australia today, the Westpac-Melbourne Institute Consumer Confidence survey for September is due. Dwelling starts for Q2 are also being released with a rise of 3% expected.

Last night's spike in the AUD came as a surprise and we sense it will range trade today after this most recent move with a good chance of some retracement.

Majors: In a night of QE3 speculation, Moody's warning and a weaker USD, spot gold prices rose towards six-month highs and base metals prices were broadly stronger with iron ore the stand out. Soft commodities were mixed.

The key event for offshore markets tonight will be the German Constitutional Court's decision on the legality of the ESM and EU fiscal pact. A German official stated they were confident the ESM would be approved and operational by October.

The market expects ratification to be somewhat of a formality, while a "no" vote risks scuttling ECB bond- buying plans. European officials will also announce plans in relation to a European banking union.
Economic Calendar
12 SEPT AUS Westpac Consumer Confidence Sep
GE Consumer Price Index Aug
US Import Price Index Aug

For the latest pricing and ranges, visit www.bellpotter.com.au