FOREX UPDATE - USD

The US dollar consolidated earlier gains overnight, posting a 1.2551-1.2574 range against the EUR and a 119.14-119.44 range against the JPY. The AUD jumped to a high of 0.7613, following the release of local consumer inflation data for the third quarter with Australian's Treasurer Costello warning to be vigilant on inflation. "Growth trades" such as AUDCHF or AUDJPY should continue to do well, while during peak global growth the USD also appears well positioned for further gains.

We think housing market and GDP data due later this week will challenge the notion that the Fed could hike again and be consistent with easing next year. However, with the Fed likely to maintain its somewhat hawkish message in the statement following its meeting conclusion today, markets are likely to be cautious about rebuilding easing expectations. Also, while the wealth effects of rising stock markets should not be overestimated, rising stocks will help to delay the projected weakness from housing.

Ahead today, the FOMC should release their decision at 1815 GMT. As mentioned above we are not expecting any changes to the statement.