Bell FX Currency Outlook:
The AUD has risen to a six-week high overnight on the back of strong gains in commodities and continued optimism on an impending solution for Europe.

Australia: Manufacturing data out of China also influenced the markets, showing a rebound in the sector on last month. All of the announcements provided some shining light, with many investors of the hope that we have weathered the recent volatile times and may be moving towards some market stability.

All markets caught wind of the optimism, with US and European equity markets also posting solid gain. The S&P 500 was up 1.3% and the DOW up 0.9%.

The commodities were the biggest winners overnight, with copper gaining almost 7% during the offshore session.

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Other base metals that posted gains included lead, up 5.4%, aluminium up 4.4% and nickel gaining 6.4%. Oil prices also rose on the back of a better global growth outlook, closing 4.7% higher at USD91.32/barrel.

Yesterday's release of the PPI data for our region was fairly in line with market expectations and indicates that we are unlikely to get any surprises
with tomorrow's CPI data.

Should the results tomorrow post as expected, then it could fuel the likelihood for an interest rate cut, as inflation becomes less of a factor in the interest rate decision.

Majors: While markets are waiting with bated breath for the announcement tomorrow night on the package out of Europe, many are speculating on what will be agreed upon.

Reports are surfacing that German Chancellor Angela Merkel told the German MP's that the European Financial Stability Facility is to be leveraged to one trillion euros and that the Greek debt will be cut by almost 60%. If these are part of the terms agreed on, the markets will be fairly happy with the outcome.

This not only affected the AUD, but also saw the EUR/USD rally to a six week high. In the US, the government are working on injecting some stimulus to the ailing housing market. Their new mortgage relief programme was announced overnight, allowing the re-financing of home loans that were previously ineligible.

As it currently stands, where mortgages are greater than 125% of the property's value, refinancing wasn't an option; but this ceiling is to be removed.

Economic Calendar
25 OCT NZ CPI
AUST RBA's Battellino speaks
US House Price Index
US Richmond Fed Manufacturing Index

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