The key event out this week is the interest rate decision on Tuesday afternoon. It is not a question of whether they will cut rates but by how much. We are expecting rates to be slashed by at least 75 basis points although we could see a cut as high as 150 basis points. If they do, it will be the fourth consecutive cut from the RBA and it is thought that they will cut rates right down to 2.5% by mid 2009.

This is mainly due to inflation cooling to the lowest level in just over a year and demand for Australia’s Dollar weakening after a monthly gauge released by TD Securities and the Melbourne Institute in Sydney showed consumer prices rose 3% last month compared to a year earlier.

There was more bad news as the Bureau of Statistics announced in Sydney that Australia’s corporate profit growth slowed in Q3 as earnings at retailers, transport businesses and manufacturers fell dramatically.

Released this week, will be the current account balance for quarter 3 and retail sales for October. Plus on Thursday we expect a lot of volatility with the release of Gross Domestic Product which is expected to come out just above zero.

For anyone looking to buy AUD in the short term, it may be wise to do it sooner rather than later and take advantage of any short term gains.

Speak with your FCG account manager about Stops, Limits and Forward contracts to protect you from any further falls in the market.