Australian Dollar: The long-awaited and much-discussed stimulus measures in the US have been announced which has sent the Australian Dollar soaring above par with the greenback to 1.0045 at time of writing. Currency markets are volatile at the moment to say the least. The US Federal Reserve will expand its stimulus program by purchasing an additional US$600 billion in treasuries, about US$75 billion per month between now and June 2011, in a bid to reduce unemployment and avert deflation. The figure was at the high end of expectations and the market is selling the greenback which has sent the Euro to a 10-month high (1.4188). The Aussie drifted lower throughout most of the domestic session yesterday, dropping to 0.9960 after a slide in local building approvals. Permits for construction of new dwellings dropped 11.6 per cent in the year to September, following a 4.2 per cent gain in August.

We expect a range today of 1.0000 - 1.0120

New Zealand Dollar: After a quiet local session yesterday hovering around the US77c area, the New Zealand Dollar opens sharply higher against the greenback today after the US Federal Reserve announced that it will expand its stimulus program by purchasing an additional US$600 billion in treasuries, about US$75 billion per month between now and June 2011, in a bid to reduce unemployment and avert deflation. The market is selling the greenback in droves which has sent the kiwi soaring to fresh 28-month highs around US78 cents. We are currently trading at 0.7780 and against the Aussie 0.7750.

We expect a range today of 0.7760 - 0.7860

Great British Pound: The pound opens higher against the greenback today at 1.6097 as positive economic data supports the view the Bank of England will leave monetary policy unchanged when it meets tonight. The purchasing managers index for services gauge rose to 53.2 in October from 52.8 the previous month. Readings over 50 indicate an expansion in the sector. The UK central bank is likely to keep its asset-purchase program unchanged at GBP200 million which, on paper, should provide support to the Sterling. Meanwhile, the pound opens at 1.6040 against the Aussie and 2.0650 against the New Zealand Dollar.

We expect a range today of 1.5940 - 1.6060

Majors: The US Federal Reserve will expand its stimulus program by purchasing an additional US$600 billion in treasuries, about US$75 billion per month between now and June 2011, in a bid to reduce unemployment and avert deflation. The figure was at the high end of expectations and the market is selling dollars at time of writing. Interest rates remain unchanged at between zero and 0.25 per cent with the central bank maintaining its pledge to keep rates low for "an extended period". In announcing the measures, and referring to a stubbornly high unemployment rate, the FOMC said "progress towards its objectives have been disappointingly slow". The Euro opens near a 10-month high at 1.4123 and the USD/JPY is at 81.15.

Data releases

AUD: Retail Sales, Sep

NZD: Unemployment rate, Q3

JPY: No data today

GBP: Bank of England rates decision

EUR: ECN rates decision

USD: No data today

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