Bell FX Currency Outlook:
The Australian dollar continues to trade in a relatively volatile manner, opening this morning around the USD 1.0400 level.

Australia: Following yesterday's release of Australia's consumer price index figures for the third quarter, the AUD took a dive as markets moved
to price in close to a 100% chance of a 25bp rate cut from the RBA at their meeting next Tuesday. While the headline inflation rate rose by 0.6% in
Q3, the core inflation rate rose by just 0.3% from the previous quarter and 2.3% from a year earlier. Market expectations had been for this measure to come in at 0.6% for the quarter and an annual rise of 2.7%.

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The AUD dropped following the release of the data, falling from around USD1.0420 to USD1.0350 almost immediately. The local unit has managed to regain some ground overnight following cautious optimism surrounding the developments in Europe. The Reserve Bank of New Zealand has this
morning announced that they will be leaving their cash rate unchanged at 2.5% while maintaining a slight tightening bias.

Majors: The messages emerging out of Europe overnight have been somewhat confusing. Markets reflected the uncertainty with both equity and currency markets recording some wild moves. The EUR traded within a 200bp range against the USD as investors reacted to each emerging headline.

It appears that some cautious optimism may have emerged at the end of the summit with the announcement of some broad agreement on plans to increase bank capital reserve ratios.

There were also reports that China may invest in the euro-zone bailout fund. The real test for markets may come tonight when the European markets open as most of the headlines from last night came out after the European markets had already closed for the day.

Economic Calendar
27 OCT NZ Exports / Imports SEP
EU Euro-zone Consumer Confidence OCT
UK GfK Consumer Confidence Survey OCT
US Pending Home Sales SEP


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