Australia: The AUD continued to trade around the 1.1000 area after recovering from a dip to just above 1.0900 after US Q2 GDP growth shocked the financial markets by rising only 1.3% annualised as compared to expectations of 1.8%.

Adding to the worries on how fast the US economy is recovering GDP for Q1 was revised downward to just 0.4% from the original figure of 1.9%. In Q2 consumer spending rose just a measly 0.1% mainly on the back of a big decline in auto sales of 23%. It appears that a vote in the US Congress may occur in the next few hours that could resolve the impasse on raising the US$14.3 trillion debt ceiling.

Although the market continues to speak of default the US government has US$28 billion in interest payments due in August with monthly projected revenue of US$172 billion to be received which can cover all the mandatory payments required.

The poorer GDP figures continued thedecline in equity markets with all major European and US indices falling on Friday and for the week. The Down and S&P 500 were down close to 4% for the week while oil moved slightly lower to just under US$96 a barrel for WTI crude.

As you would expect gold pushed to a new all-time high of almost US$1628 an ounce. This morning we will see the release of China's July PMI data which most analysts expect to be at 50.2, down slightly from the June figure of 50.9.

A figure above 50 indicates expansion in the Chinese manufacturing base which bodes well for the AUD. Tomorrow afternoon the RBA will announce their decision on interest rates which we expect not to change from the current 4.75% rate.

Majors: Although the US GDP Q2 numbers were disappointing, most analysts do not expect the Federal Reserve to roll out QE3 since the Fed's preferred inflationary indicator, the core PCE deflator which also was released on Friday, rose by 2.1% qoq annualised which is up on the 1.6% figure for Q1.

The CHF continues its relentless rise against the USD hitting new highs. Although a resolution of the US debt ceiling fiasco will definitely provide a lift to equity markets, the USD eventually will come under further pressure due to the weakness of their economy and the need to further trim budget deficits greater than the US$2.5 trillion over 10 years currently being debated in the US Congress.