Bell FX Currency Outlook: The Australian Dollar is steady this morning after an overseas session that was positive following the German Constitutional Court (GCC) allowing the ratification of the European Stability Mechanism (ESM) to pass conditionally.

Australia: Equity markets were slightly bid on the above development. Precisely what happened was the GCC ruled Germany's participation in the ESM did not violate the German constitution, but it did impose a cap on Germany's contribution on a pro rata basis, calculated by GDP.

This cap can't be increased in the future without approval by the lower house of parliament and it also stated the German parliament must be informed about ESM decisions.

The President of the Euro Group declared the start date for the ESM to be 8 October 2012. This buoyed the EUR to a fresh four-month high.

Beyond that, it was a quiet night as the markets eagerly await tonight's FOMC meeting. Yesterday's local releases saw Australian dwelling starts rise 4.6% in Q2 while consumer confidence rose 1.6% in September.

Today consumer inflation expectations for September are released along with the RBA's Q3 Bulletin. Tonight, the main event is the
US FOMC Meeting, while on the data front we have the US PPI and the weekly jobless claims. Today is likely to be pretty quiet as a result with any price action on the AUD likely to be on the downside after the recent
strength.

Majors: The US Dollar was relatively unchanged against most currencies with the exception of the EUR. Oil was stronger following the GCC's decision but then data showed a rise in US crude stocks and this pared back the gains. Gold was relatively unchanged and remained near six-month highs.

Gold has been the reason for a large percentage of investor demand into commodities during August as expectations build for further economic stimulus by the Federal Reserve. Base metals prices were mixed as were agricultural commodities prices. The

USDA crop report released overnight indicated that the third global food price spike in four years may have peaked with the US drought expected to do less damage to crops than initially feared. As stated, the Federal Reserve will announce its policy decision tomorrow morning at 2.30am AEST with a likely scenario being QE3 and keeping the federal funds rate at extremely low levels for a further two to three years.
Economic Calendar
13 SEPT AUS RBA Board Bulletin
AUS Consumer Inflation Expectation
US PPI data & Initial Jobless Claims
US FOMC Rate decision

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