The Australian Dollar is relatively unchanged this morning after a choppy session in financial markets overnight.

Australia: The AUD found support yesterday when minutes from the Reserve Bank of Australia (RBA) board meeting gave no indication it would cut the cash rate again after its cut at the November 1 meeting. It seems the decision was finely balanced and the Bank is considering at most one more rate cut, not the four currently priced in by markets, unless economic circumstances change, with little to no suggestion of a move in

December so the market remains disjointed from RBA thoughts for the foreseeable future. This local support disappeared overnight due to increased pessimism about the Euro Zone crisis which led to all major currencies falling against the US Dollar. The big concern at the minute is the rising cost of borrowing for European governments. Italian bond yields jumped back above 7% and Spanish, French, Austrian, Belgian 10-year bond yields have risen significantly as well. Concerns about the Euro Zone debt crisis is shifting towards the core of Europe and one suspects further action from the EU to stabilise the debt crisis will occur. Locally today, the Q3 wage price index data is released at 11:30am AEST and the market is forecasting a 1.0% increase in wages against market expectations of a 0.9% rise. Westpac's monthly leading index and DEWR's monthly survey of skilled vacancies on the internet will also be released this morning and we expect the AUD to trade in a narrow range today before more volatility tonight.

Majors: The EUR was sold on rumours of downgrades (Austria, Italy), a poor German ZEW and rises in peripheral (and not so peripheral) European bond spreads. There was decent data released in the US but the focus remains on Europe with those Italian bond yields back above 7%. Oil and gold rose slightly as investors continue to support the alternative asset to sovereign bonds. Base metals were sold off on European debt concerns as French, Italian and Spanish yields climbed but soft commodity prices were supported by the better than expected US retail sales data. Today we have the NBNZ Regional Trends Survey (Q3), the BoJ meets, the BoE releases its quarterly Inflation Report and we have a plethora of data out of the US in the form of CPI, Net Long Term

Treasury International Capital Flows; Industrial Production and the NAHB builders' sentiment index.

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ECONOMIC CALENDAR

16 NOV AU Wage Cost Index Q3

JN BoJ Target Rate NOV

UK BoE Release Quarterly Inflation Report
US Consumer Price Index OCT