Australian Dollar Forecast Nov 5

The key news released overnight was the US Federal Reserve Rate announcement, which kept rates on hold as expected, weighing on the US Dollar.

Yesterday locally the AUD was subjected to some selling following the release of the Retail sales data for September, which came in down 0.2% for the month, against the market's expectation for a rise of 0.5%.

On a positive note, the Australian building approvals data reported a rise of 2.7% in September with apartments up 15% while private houses were up 0.3%.

Base metals rose again overnight, with lead up 0.5%, while copper rose 1.8% and gold pushing higher to a new record high - currently trading at US$1097.00 per ounce.

Today will see the release of the Australian Trade Balance data for September. We expect to see the AUD well supported throughout the local session on the back of firmer equities and commodities.

Majors: The FOMC Statement noted that the economic conditions "are likely to warrant exceptionally low levels of the federal funds rate for an extended period".

Of note, the FOMC said that economic conditions had continued to pick up, with household spending now expanding rather than just stabilising.

They also noted in the statement that with ongoing job losses, sluggish income growth, lower housing wealth, tight credit and businesses still cutting back on fixed investment and staffing, low rates will be warranted for some time.

Also overnight, US ADP employment data was released, showing a fall of 203k in October following the 227k fall in September. The US ISM non-manufacturing index fell to 50.6 in October from 50.9 in September against the median forecast of 51.5.

Provided by bellfx.com.au