Australian Dollar Outlook 12/10/2010
Australia: With holidays in the US, Canada and Japan, overnight markets have had a very quiet trading session, with no major data was released.
The AUD weakened briefly overnight as an unconfirmed report from Reuters saying that the Bank of China had raised it's reserve ratio for its largest banks to 17.5%.
This weakness was shortlived and saw the AUD move back into its recent trading range as the reports were unconfirmed.
Today sees the release of the NAB business survey for September, but it is unlikely to have a large impact on markets with more movement expected when the offshore sessions come into play.
One of the big 4 banks has this morning come out predicting that the AUD will hit parity by the end of the week as investors believe more and more that the US will begin 'printing money' as part of it's Quantitative Easing measures.
Majors: As mentioned above, with many of the larger offshore markets on holiday, it made for a very quiet and thin trading session.
US equity markets closed flat, with the DOW and Nasdaq up 0.2% and the S&P500 falling 0.01%.
Tonight's release of the mintues from the FOMC meeting will be watched closely by the market, with investors looking for further indications of possible QE.
The EUR/USD has opened this morning below EUR1.3900 after comments on Friday from the head of the Euro-group of finance ministers, Jean-Claude Junker that the EUR was too strong and didn't reflect the region's economic fundamentals continued to play on the markets due to the lack of other releases.
The GBP/USD also weakened during the session, but it's likely that the raft of data releases tonight including Retail Sales, CPI and Trade Balance will provide some direction for the currency pair.