Australia: The Australian Dollar has opened at USD 0.9855 this morning after announcements overnight by the US Federal Reserve that it was ready to provide more stimulus to the US economy "before long".

It traded below USD 0.9800 in early offshore trading before recovering in the US trading time zone.

Interestingly, the lows in the AUD didn't last long, this is a trend we have seen for sometime and seems likely to continue for the time being whilst the US situation and policy-settings play themselves out more.

Of interest yesterday to Australia, was the decision out of China which announced the lifting of the proportion of funds that banks must set aside as reserves by half a percentage point, the first such move since May, as a continuation of efforts to drain cash from the
economy, according to a report.

The increase will apply to the nation's six largest commercial lenders, boosting their reserve ratios to 17.5% and the policy tightening will last for two months.

This hike means that the PBOC will continue to focus on quantitative tools instead of rate hikes to manage liquidity and to control inflation.

There is no market moving data due during the rest of yesterday's domestic session.

Majors: In minutes from the most recent Federal Open Market Committee (FOMC) meeting, the US Federal Reserve demonstrated clearly that is in favour of taking new actions to reinvigorate the sluggish and jobless recovery in the absence of any clear signs of improvement in the US economy by easing monetary policy.

But the minutes provide no specific details on plans for new stimulus. Speculation that the Fed would resume quantitative easing (QE) has driven market action for about two weeks.

QE is when the Fed injects cash into the economy by buying US treasuries in the market. QE was used by the Fed to tackle the worst of the global financial crisis.

EUR/USD fell below 1.3900 before recovering on hawkish comments from ECB's Webber who called for the unwinding of special liquidity measures as soon as possible.

GBP felt pressure on weak housing data and dovish comments from BoE's Miles who said the Bank faces the "risk of tightening monetary policy too soon".