Bell FX Currency Outlook: Australian Dollar continues its surge in offshore trade as local inflation and Chinese manufacturing support.

Australia The Australian dollar continued to trade higher overnight as domestic inflation and Chinese manufacturing data buoyed the currency with moves higher across the board; most notably against the EUR.

The local unit peaked at 103.67 US cents, its highest level since Friday and just below 0.8000 against a weaker EUR. Figures yesterday showed the Carbon Tax is having an impact on inflation prices, with Australia's consumer price index (CPI) rising to 1.4% in the September quarter.

China's manufacturing output fell at a slower pace for the second month in a row. The HSBC Flash manufacturing PMI was released at 49.1 - a three month high.

With no local data due today markets will turn toward key US data due for release tonight and tomorrow night.

Majors: US equity markets closed lower for a second night as tepid corporate earnings and a defensive US Federal Reserve soured markets.

The FOMC noted that growth for US remains moderate, but there is a marginal increase in household spending in line with recent improved Retail Sales and Housing data.

The unemployment rate remains high and accommodative policy is likely to remain for some time. The S&P 500 finished 0.4% lower at 1,408 whilst the DJIA ended 0.2% lower to 13,071.

French and German manufacturing data fell unexpectedly, with business sentiment dropping for a sixth consecutive month to its lowest level in over 2 years.

Despite the weaker than expected data, European equities ended the session higher, supported by some positive corporate earnings results.

The FTSE rose 0.1% to 5,805 while the German DAX ended 0.3% higher at 7,193. An unexpected rise US crude inventories, coupled with weaker Eurozone data weighed on oil prices with Brent falling 1.5% to USD 107.6 per barrel and WTI Futures falling 2.0% to USD 85.6 per barrel.

Gold prices were also weaker ending the session 0.3% lower at USD 1,702 per ounce. Metal prices were mixed with Agricultural commodities generally stronger.
Economic Calendar
24 OCT NZ RBNZ policy decision
EC Sep Money Supply M3 %yr
UK Q3 GDP %qtr advance
US Chicago Fed National activity Index
US Sep durable goods
US Initial jobless claims w/e 20/10
US Sep pending home sales

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