Like everywhere else with a high yielding currency there was dramatic volatility in the Australian dollar currency parings last week. However the Australian Economy has become a rare breed posting almost unheard of figures among Northern Hemisphere economies, with Bullish readings from both inflation and growth data underpinning the Aussie dollar. Of course the Fed rate cut had its effect here, completely reversing the previous weeks sell off of AUD. However unlike every other central bank who is thinking of following suit and cutting base rates, markets are pricing in a 47% chance of a February rate rise in Australia following the inflation figures. It is still probably an outside chance however as markets have all been stretched by recent events and the smart money would be on a no change until the dust has settled. We expect a period of Aussie dollar strength against the pound.