Australia: The Australian dollar remains well supported despite further bad news out of Europe overnight. The local unit is likely to remain strong heading into the end of the year in what is becoming an increasingly thin market. However, moves back through parity are likely to remain constrained as investors wait to see how the new year begins in 2011. Overall, the medium term outlook remains relatively bullish for the AUD based on the outlook for capital flow into Australia, commodity prices and interest rate differentials. On the crosses, the AUD has had further strong gains overnight, trading to a 25 year high against the GBP of GBP0.6500, and an all time high against the EUR around EUR0.7640. With no local data due for release today, we are expecting a relatively quiet session.

Majors: US 3Q GDP data released overnight came in marginally below expectations. US gross domestic product rose at a 2.6% annual rate in the third quarter. Forecasts had been for an increase closer to 2.8%. So while the US economy continues to grow at a modest pace it appears likely the US Federal Reserve will be keen to continue with their QEII stimulation programs. Existing home purchases in the US increased 5.6% to a 4.68 million annual rate. Economists had been expecting a figure closer to 4.75mio. The USD gave up some ground against the JPY but managed to stay relatively unchanged against the EUR due to the negative sentiment surrounding the European debt crisis. There is talk that Greece could have its credit rating downgraded to non-investment grade by ratings agency Fitch within the next six weeks. Clearly the problems in Europe are likely to persist for some time yet.

More from IBT Markets:

Subscribe to get this delivered to your inbox daily

Follow us on Twitter.

Follow us on Facebook.