Australian Dollar Forecast Nov 3

The AUD took a tumble early on yesterday when AUD/JPY broke the 80.00 level on the back of worsened risk appetite.

The poor showings on the equity markets on Friday night spooked the markets big time but last night, better than expected economic data provided some relief and saw the AUD bid over 0.9000 again.

Is the global economy recovering or not? That is the main question in the currency markets, and the wild swings yesterday in AUD/USD and AUD/JPY prove that volatility is rife as ever and care needs to be taken.

Essentially, the near term outlook for risky assets such as the currency commodities remains as unclear as ever.

China announced it's manufacturing PMI rose to an 18-month high and this, along with a jump in UK PMI for manufacturing, saw the Global manufacturing PMI rise to a 39-month high.

You'd think this is supportive of a higher AUD. All the national PMI's for the major economic regions are showing growth.

However, maybe this will lead to support for the beleaguered Greenback.

The conundrum continues. Locally, a 0.25% rise in the Official Cash Rate seems the most likely scenario when the RBA announce their decision at 2:30 AEST but as important as ever is the RBA statement.

Good luck today and enjoy The Melbourne Cup and the horse you draw in your office sweep wins!

Majors: The US Dollar was unchanged against the majors following the data flow, with EUR/USD rallying towards 1.4850 before retreating to 1.4660 and GBP/USD trading just south of 1.6400.

Crude oil rose overnight from twoweek lows on the back of the good manufacturing data, and spot gold found itself higher rising to a one-week high.

Copper rallied 1.2% whilst lead, aluminium and tin were all steady. US equities were higher and European equities closed slightly higher as well.

There is concern that capital adequacy is insufficient at some institutions in the US with credit losses rising, particularly on commercial property lending, and, as US Federal Reserve Associate Director Greenlee stated "...banks face risks of sizeable additional credit losses given the outlook for production and employment".

A relatively quiet night tonight is expected, with more data due later in the week and particular scrutiny building towards Friday's payroll results.

Provided by bellfx.com.au