Australia: The AUD traded up into the mid 0.9400's on Friday evening but has started this week lower around the 0.9370 level as equity markets eased in Europe and the US on concerns of sovereign debt issues in Ireland and Portugal and a weaker consumer confidence survey from the University of Michigan.

In past months, some of the talk about sovereign debt problems in Europe and the widening of credit spreads for Ireland and Portugal would have sent financial markets lower in a more expeditious fashion, than what we saw. This seems to be a testimony to the more bullish tone everywhere in financial markets.

US equity markets recorded small gains (Dow and S&P500 up only 0.1%) as there were better than expected results from Research in Motion, (which makes the Blackberry and Texas Instruments), but this was offset by the consumer confidence survey for September that saw the index fall to 66.6 from the figure of 68.9 in August.

Gold touched another record high at US$1,282 an ounce and the crude oil price slipped to US$73.66 as the pipeline leak on the US-Canadian border was repaired. All eyes will be on the speech later today by RBA Governor Stevens and the release of the September board minutes on Tuesday.

There is a growing view that we may see another rate rise before the end of the year rather than waiting until early 2011.

Majors: The Bank of Japan's intervention to stop the rise of the JPY against the USD continued late last week and it was reported they spent over US$23bn.

The market opens relatively unchanged in the mid 85's today. With a holiday in Japan today, we expect trading to be mooted and the markets wary of further BOJ intervention.

Early on Wednesday morning Australian time the US FOMC meets and opinion is evenly divided that further quantitative easing will occur. We tend to believe no further accommodation will be done.

Later in the week new and existing home sales and durable goods orders will give further clues as to the strength of the US recovery.