Australia: The AUD has opened stronger this morning gaining overnight with news that China will take over Japan's place as the world's second largest economy.

With this news the bullish investors came into play and overnight saw the AUD got very close to breaking USD0.9000, but it has since fallen this morning to be trading around USD0.8970.

News that China was also reducing it's holdings of US Government debt helped boost the riskier such as the AUD and NZD.

While US equity markets were flat, the Shanghai composite was up 2.11% following the news regarding China's ranking.

Locally today the RBA will release the RBA board mintues from its August meeting which saw the cash rate remain at 4.5%.

While little new news is expected, investors will still be paying attention to gain an indication on when the next interest rate movement may be.

Governor Stevens will also be speaking tonight about 'the role of finance' but also unlikely to give investors fresh information.

It's possible that the AUD will strengthen during the local session and break through USD0.9000.

Majors: As mentioned above Japan has lost its standing as the world second largest economy, due to some poor GDP results released overnight. In Q2, the economy increased by 0.1% compared to market expectations of a 0.6% gain.

Some of the main influences behind this result is the fact that consumer spending has all but stopped and their export growth has declined.

With the sharp slowing of Japanese economic growth it has done little to dampen concerns that Japan's fragile economic recovery may be running out of steam.

This put the USD/JPY in the spotlight last night falling to JPY85.40 from JPY86.20 as the results saw investors move towards the JPY.

Poor US data of recent times also assisted the USD weakness and attractiveness of the JPY as a safe haven currency.

The US has a raft of data out tonight, with markets hoping that there may be some positive light that comes from it.

US PPI, Housing Starts, Industrial Production and ABC Consumer Confidence are all due to be released during today's offshore session

Newsletter: To receive this report daily, sign up here

Australia Japan China