• AUDUSD  falls from 1.0250 to 1.0010 in the past 7 days , 2011 average rate = 1.0310
• European outlook still on the front of the headlines, causing instability, markets still don’t trust Italy and Spain can withstand the debt burden they have accumulated. Fiscal pact in Europe is a solid  treaty for medium to long term budget balancing but does nothing to tackle current problem.
• Australia cuts interest rates, has solid 1% growth for the 3^rd quarter of 2011, however trade balance slightly down, commodity prices down, unemployment rises slightly
• Inflation drops in China, US retail sales fall below expectation however still show positive growth month on month

AUDEUR

• AUDEUR stays in solid range of 0.7550 to 0.7710 last 7 days hugely above its 3 month and 12 month average, this is largely due to the Euro being sold off in conjunction with AUD weakness in the past 7 days.
• French President Sarkozy warns his country a downgrade is coming, Standard and Poor’s puts 15 countries in the Eurozone on negative credit watch

AUDGBP ( GBP/AUD)

• AUDGBP has narrow range of between 0.6550 and 0.6450
• Closely mirrors AUDUSD currency pair

AUDNZD (NZD/AUD)

• AUDNZD climbs from 1.3100 to 1.3225 in past 7 days
• NZD interest rates on hold at 2.50%, house prices and building consents rise

General Consensus

The AUD has strengthened against  EURO, but fallen against most other currency pairings in the past week. Market sentiment is still defaulted to a negative outlook, and although a successful European summit on the weekend consolidates Europe for the future, the burning issue of Italy’s $1.2T debt mountain awaits. Traders & investors are not willing to accept the problem is resolved as they feel Italian and possibly Spanish debt must be reduced to a sustainable level. The ECB has already been buying Spanish and Italian debt since August this year, but interest rates ( coupon) still stands at a jittery 6.70% for the former . This has affected confidence, and therefore spending habits of the consumers around the world which has slowed China’s production & inflation, and remains the number 1 risk going into a more positive but subdued Christmas break.