Australia: The Australian Dollar is slightly lower this morning, trading just above parity against the US Dollar as we head towards the G20 leader's summit in Seoul this week.

The emerging feeling for our Australian Dollar is still one of strength. Numerous scenarios seem to support this notion.

We believe the Federal Reserve's announced QEII is really important in regard to the AUD over 2011, as the measures taken by the US to assist the US economy's immediate prospects seem to lead to a continuing weak USD for some time yet.

The impact of this alone is huge given the US Dollar's title of the world's reserve currency.

Commodities including silver and copper are trading at levels last seen in October 2008 as investors move money into hard assets that will hold value even if the USD falls.

Locally, the background for the Australian economy and forecast growth remain healthy and the strong mining outlook seems set to stay on track.

Additionally, there are clear signs of domestic capacity constraints which places upward pressure on inflation which, yes you guessed what we're about to say, means interest rates will under pressure to rise further over 2011.

On Thursday, China will release its inflation, retail sales and industrial production data for October.

Australian labour force data for October, which includes the unemployment rate, will be released on Thursday.

We expect some volatility over the next day or two due to the range of data being released that can individually and collectively have an impact on the AUD.

Majors: The US Dollar gained back momentum leading into the G20.

The Greenback has been falling against other currencies in anticipation of the Fed's stimulus program, but it gained 0.9% against an index of currencies overnight as rhetoric from G20 officials started to gain traction and as new troubles emerged in Ireland, one of
the weaker countries that use the euro, Europe's shared currency.

Investors are concerned that Ireland's government will not be able to pass additional spending cuts and will have to ask for financial assistance.

Greece, another member of the euro club, was forced to seek a bailout from other European countries in April after investors dumped the countries bonds in the wake of a fiscal crisis there.

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