Sterling suffered a cruel blow overnight as the Minutes from the Bank of England's November meeting where released. Despite a unanimous decision to keep rates at 50bpts, the finer points of the minutes showed division amongst Monetary Policy Committee members in relation to the quantitative easing program, which to date has seen GBP175b injected into the economy with a further GBP25b committed earlier this month. 

Although the final ruling was in favour of an increase to GBP200 billion, one member voted in for an extension to GBP215billion, whilst BOE Chief Economist Spencer Dale voted to cap quantitative easy program at the GBP175billion already served.  However the premise of continued support of the UK economy suggests that it is struggling to recover.  The ensuing minutes of the release saw the pound initial falling to lows of 1.6773 against the greenback; any composure was soon lost and the dollar found strength as US equity markets kicked off.

To the states and Housing Starts showed a surprise decline in October, falling more than 10 percent to an annual figure of 529,000. This was well below the 600,000 expected by economist, attributed to the tax credit expiry. We also saw building permits suggest future construction is slowing with the data showing a decline to 552,000 against 575,000 last month. Further weight was given to the fed's stance to keep interest rates at records low for an extended period, as inflation data showed a rise of 0.3 percent in October, representing an annual decline of 0.2 percent. 

Fed official Richard Fisher has recently suggested the Central Banks current stance on interest rates could remain into 2011 as inflation and economic growth are likely to remain below desired levels. Is this enough to combat the dire unemployment situation going forward? Increasingly we are seeing renewed calls from economists to inject the US economy with another shot of stimulus, before unemployment threatens to hamper a sustained recovery.

The Aussie dollar has struggled overnight falling to session lows of US$.9266 early this morning.  With little in the way of economic releases we expect movements to be contingent to equity markets which have started the day with moderate gains - we expect the Aussie dollar to trade between a reasonably tight range, with key support remaining in mid US$.9260's with the upside seemingly capped in the low US$93's.