By Greg Peel

The Dow closed up 11 points, or 0.1%, while the S&P fell 0.1% to 1459 and the Nasdaq was flat.

A lot has happened since the RBA held its September policy meeting with regard to the ECB and Fed, and the crash and partial bounce of iron ore prices, thus rendering the minutes of that meeting, released yesterday, a little out of date. However the salient points of the discussion are no less relevant.

In August the RBA assumed the Chinese economy had begun to stabilise, but noted in September that recent Chinese data had been "a touch weaker", accompanied by said sharp falls in iron ore and coking coal prices. "If sustained," such price falls would mean a lower terms of trade than previously assumed, but still at historically high terms of trade, the central bank noted. We've seen iron ore break down at US$120/t to fall quickly to around US$85/t and then bounce to around US$109/t by this morning. The impact on Australia's GDP growth outlook will remain unclear until more stable prices eventuate. Meanwhile, coal prices remain subdued.

The price falls have forced the shelving of some mining projects, the RBA acknowledged, although not enough to have a meaningful impact on growth projections. However, the board noted that ongoing low prices accompanied by high costs will have implications for projects still under consideration. So again, growth projections are in the balance. And then there's the currency.

"Members discussed the possibility that the high level of the exchange rate was weighing more heavily on the economy than might be expected". This is arguably the most important sentence in all of the minutes. We then add this sentence to the above growth uncertainty and link both to this sentence: "The current assessment of the inflation outlook continued to provide scope to adjust policy in response to any significant deterioration in the outlook for growth," and we thus have the formula for further rate cuts. Some economists say October, others November, and others are still holding out for 2013. History suggests the RBA likes November and December, and given the minutes suggested "there were signs that the effects of the earlier reductions in the cash rate were still working their way through the domestic economy," we can probably dismiss an October cut.

The market is nevertheless anticipating a cut sooner rather than later, which is why the Aussie is lower post the QE3 announcement than higher, as one would expect. Today, the Aussie is 0.3% lower over 24 hours to US$1.0450, helped by a 0.3% rebound in the US dollar index to 79.19 (albeit the Aussie is not an index constituent). QE3, ECB action and a lower Aussie would be a magic elixir for local market confidence (noting that QE3 and ECB indirectly help the Chinese economy), but it is more likely any RBA rate cuts will simply stop the currency going higher rather than send it meaningfully lower.

I have roped Fed and ECB action together, but the reality is that while we now have QE3 we still have only a pledge from the ECB, not action. The ECB will not start buying Spanish bonds until Spain asks for a bail-out, which it hasn't yet. Threatened ECB action is keeping a cap on Spanish bond yields, thus providing Spain with the capacity to hang in there and avoid the strict austerity measures that would accompany an actual bail-out. In theory, this limbo could carry on indefinitely. Meanwhile, state after Spanish state keeps asking the federal Spanish government for a bail-out. How long will the game play out? Who knows? And in the meantime, European politicians continue to bicker over the details of further fiscal and monetary union. Well cut my legs off and call me Shorty.

And all the while tensions build on the Israel-Iran and China-Japan fronts. Not good for business.

Next month will see the next quarterly earnings reporting season in the US, which again will provide a dose of reality amongst all the smoke and mirrors of money printing. Last week, global economic bellwether FedEx again cut its full-year earnings guidance, citing weaker global conditions, thus keeping a lid on any ongoing optimism on Wall Street. By contrast, the NAHB index of housing market sentiment has risen to 40 this month ? its highest level since June 2006. The index has been on a steady grind up all year, although we must remember that 50 is neutral.

Base metal prices were mixed on mostly small moves in London last night, but oil again took a dive, with Brent falling US$1.76 to US$112.03/bbl and West Texas US$1.14 to US$95.48/bbl. Monday night's sudden price plunge has no doubt spooked some traders and weekly inventory data comes out tonight, but either way a lower oil price, while welcomed, flies in the face of QE3 and, like the Aussie, oil can only be supported.

I'd hate to be a gold trader at the moment. Yesterday I called gold "enigmatic" but perhaps "schizophrenic" might be more appropriate, with gold last night rising US$10.10 to US$1771.50/oz despite the stronger US dollar.

The SPI Overnight was up 9 points, or 0.2%.

There are more housing data out tonight in the US, while locally today we will be subject to the horror that is David Jones' ((DJS)) full-year result.

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