Bell FX Currency Outlook:
The Australian Dollar has opened fairly unchanged from yesterday to be trading at USD1.0240 as positive moves overnight helped support the local currency.

Australia: Yesterday the Reserve Bank of Australia cut the official cash rate by 25 basis points to 4.25% which initially saw the AUD lose half a cent. While the rate cut was priced into the market, the comments from the RBA seemed to have caused for more concern in global growth.

The Board's comments for the rate cut decision included "the likelihood of a further material slowing in global growth has increased" given the recent troubles in Europe.

They also mentioned that the European troubles are spreading to Asia via a slowdown in trade and that global financing
conditions have become "much more difficult", especially in Europe.

Base metals where mixed overnight with copper falling 1.3%, nickel and aluminium falling 0.4% & 0.8% respectively, while lead and zinc posted small gains of 0.2%. Gold finished up 0.4% to US$1,729.55 an ounce while oil ended up 0.3% at US$101.26 a barrel.

Today will see the local market focus on the Australia GDP data for the 3Q with a reading of 0.7% expected. Should we see a higher reading in the GDP data today and firmer equity markets, the AUD could push higher and retest the USD1.0300 level.

Majors: Overnight the rating agency S&P put all EU countries on notice for a downgrade, which is really of no surprise and could actually be viewed as a positive as it may force the European leaders to reach an agreement at this weekend's EU summit. Tonight will see the ECB meeting which is most likely to see a reduction in rates, while the Bank of England overnight announced the introduction of a new contingency liquidity facility designed to help reduce the short term GBP liquidity problem.

The Italian 10year bond yields continued to decline overnight trading at 5.87% down from 7.4% last week. Meanwhile the Bank of Canada left its cash rate unchanged at 1% noting that the Canada and US economies are improving but the deteriorating European outlook is of concern.

Economic Calendar
7 DEC Aust GDP 3Q
German Industrial Production
UK Industrial Production
US MBA Mortgage Applications