Bell FX Currency Outlook: The Australian Dollar traded in a fairly tight band overnight under 0.9000 as financial markets reacted to the possibility of missile strikes in Syria.

Australia: Financial markets have been affected by the possibility of the US leading a missile strike against Syria over the use of chemical weapons in that embattled country. UK Prime Minister David Cameron has recalled Parliament to discuss the options of what action might be taken by the UK in conjunction with the US and other Western allies.

Equity markets were down around the world with the some major European indices falling over 2% while the US indices all fell as well and oil rose by 3% to an 18 month high and gold continued to push higher.

Bond yields all fell modestly in the major markets. Locally the AUD continues to have a negative tone to it trading as low as 0.8937 overnight. Yesterday China's industrial profits for July rose by 12% yoy as compared to a rise of 6.3% in June.

Today in Australia we will see the HIA house affordability index and also construction work figures for Q2 which will give us a good idea of how the local economy is doing. Most analysts see an increase of 1% for the quarter.

Majors: In the US overnight the Conference Board's consumer confidence index rose to 81.5 from last month's figure of 80 and is getting close to the highest reading of late which occurred in June of 82.1.

There was better news on the housing front again with the Case Shiller house price index rising 0.9% in June giving a yoy rise of 12.1%. This acceleration in house prices will start to moderate as mortgage rates have risen over 1% over the last 4-5 months for an average 30 year loan and banks continue to maintain tough lending standards.

Manufacturing activity released by Richmond Federal Reserve branch also rose. In Germany the IFO business sentiment survey for this month rose to 107.5 from 106.2 which was better than expected adding to recent encouraging news from Germany.

That old US government debt ceiling issue has returned to the news with warnings the US will reach its limit during mid-October. With tensions rising in the Middle East we saw both the JPY and CHF strengthen against the USD.

If military action is taken by the US and its allies financial markets will obviously be affected and we would expect some volatile moves in currency markets.
Economic Calendar
28 AUG AU Construction Work Done Q2
JN BoJ Dep Governor Speaks at Chamber of Commerce
US MBA Mortgage Applications 23-Aug
US Pending Home Sales Jul

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