Australia: The AUD has opened slightly weaker this morning after strengthening during the later parts of our trading session yesterday and the start of the offshore session overnight as a result of some unexpectedly strong data for Australian producer prices.

The data release yesterday showed an increase in producer prices of 1.3%; greater than the 0.5% increase expected by the markets, and has investors slightly concerned about the CPI data due out tomorrow.

Should the inflation numbers come in strong, then it increases the chance that we'll see the RBA pull the trigger and increase the cash rate to 4.75% next Tuesday.

Current expectations are for an increase in the Consumer Price Index of 0.7%. While the AUD is still holding around USD0.9900, it is expected to tread water until the release of the CPI figures due out tomorrow.

Majors: The USD had a volatile night overnight, initially weakening on the back of continued quantitative easing talk, but then rebounded after some positive data out of the US. While on the surface the data was positive, when you dig a little deeper, you realize that the US economy is still in a fairly stagnant state.

The Dallas Fed Manufacturing Index increased to 2.6 up from - 17.7 last month; however the important new orders and number of
employee components still remain in negative territory.

Existing home sales for September rose 10% which further extends the previous months gain of 7.3%. While this is a positive step, the sales figures are still below what the country was experiencing prior to the home buyer tax credit, and still down 19% for the year.

The USD weakness also extended to other currency pairs as the USD touched a 15 year low against the JPY. Reports released yesterday stated that some Japanese companies are looking to lower their budgeted rates as they expect further strength in the JPY.

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