Bell FX Currency Outlook: The Australian dollar has opened this morning over 1.0300 as new leaders took control in Greece and Italy and the financial markets breathed a sigh of relief.

Australia: Although U.S. banks and the bond market were closed on Friday for the Veterans Day holiday, equity markets were trading, and the positive lead from Europe, where all major indices were higher, continued through to the U.S. session.

The Dow finished up 2.2% to 12,154 with the S&P 500 and NASDAQ both higher by around 2%. In this more positive environment, the AUD rose along with many of the hard commodities as the "risk-on" trade again caught the short sellers the wrong way around.

Gold rose to US$1,788 and most of the base metals were higher. This week sees very little new data to be released in Australia after the heavy schedule of last week. Most attention will focus on the release of the RBA's board minutes on Tuesday. On Wednesday the wage price index for Q3 will be announced and most analysts expect a 1% higher figure for Q3.

RBA Governor Stevens will be speaking on Thursday. We expect that the AUD will again be very volatile as the prospects of new austerity measures in Greece and Italy also fluctuate.

Majors: In Italy, with PM Berlusconi agreeing to step down and former EC Commissioner Mario Monti taking the reins the Italian bond market rallied with yields falling almost 1% pa to finish at 6.42% pa after their huge sell off last week. Monti's job to push through new austerity measures will not be an easy task. The new Greek Prime Minister Lucas Papademos faces the same issues and although the markets have calmed we expect many turbulent days ahead as both new leaders try to implement their plans.

Somewhat lost in the background on Friday was a much better than anticipated consumer confidence survey from the U.S. University of Michigan that saw the index rise higher than expected (64.5 versus 61.5).

This is the third month in a row the index has risen. Later this week we expect Europe will have to share the spotlight with the U.S. as more attention is focused on the US Congressional bipartisan "super committee" that has to report by Nov. 23 (the day before the biggest U.S. holiday of Thanksgiving) on plans to reduce the U.S. government deficit by US$1.5tr over 10 years or mandatory cuts to entitlements begin. There will be plenty of political theatre to distract the market from the woes of Europe.

Economic Calendar
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