Australia: The Australian Dollar surged following comments from Federal Reserve Chairman Governor Bernanke in a keynote speech to global central bankers lifted market sentiment on Friday night.

The AUD has risen above USD0.9000 this morning, which is well up from Friday's close of 0.8870 as US stocks rallied more than 1.5% in response to his speech.

Bernanke said the Fed was prepared to take aggressive steps to boost the US economy if the outlook worsened in a speech to global central bankers.

He stated there still was as a good chance that US economic expansion in 2011 will increase, despite a sharp fall in US economic growth to 1.6% in the April-June period.

So Bernanke's speech seemed to hit the mark in several areas, one of the main ones being downplaying US recession concerns and he also left the door open to further stimulus from the Fed should the US outlook deteriorate further.

Pretty amazing stuff when you stop to think the gloom that was developing around the markets over the last few weeks regarding a US double dip recession.

We almost forget there was a federal Election here last week and with nearly 85% of the vote counted, the Coalition has 73 seats to Labor's 72, the Greens 1 and the 4 Independents.

The feeling is it will be another week before a Government is formed. Key data locally this week include Australian Gross Domestic Product (GDP) figures and Chinese manufacturing data, both on Wednesday, Euro zone GDP on Thursday night and US unemployment data on Friday night (AEST).

We feel that Bernanke's speech is a big deal for our AUD and expect it to be supported around these levels and trade in an approximate range between 0.8970 and 0.9035.

Majors: The USD was sold down following Bernanke's speech, EUR/USD rallied modestly, as did GBP/USD and whilst USD/JPY fell with improvements in risk appetite.

Crude oil rose on his comments, LME Copper rose 1.7% and other base metals traded stronger with aluminium, nickel, zinc, lead and nickel all doing well.

The Dow Jones Industraial Average finished 1.7% higher and European equities finished higher as well.

He stated that should conditions "deteriorate significantly", the Fed would provide "additional monetary accommodation through unconventional measures if proved necessary".

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