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Daily Review 02.11.2016

Australian dollar surge may signal better Global economic growth

The Australian dollar, world’s fifth-most traded currency climbed for a third-straight day after the Reserve Bank of Australia left its benchmark interest rate unchanged and said consumer-price gains are likely to pick up.

Driven by rising local bond yields and commodity prices, the Aussie is the strongest major developed currency since the end of June, some analysts are predicting further gains to an 18-month high.

The currency has also drawn strength from rising prices of metallurgical coal, which have tripled, and the 48 percent surge in iron ore in China this year, helping boost Australia’s terms of trade after more than two years of declines.

The economy will expand 2.9 percent this year, the fastest since 2012, and remain at that level through 2018, according surveys of analysts. Inflation will accelerate in the next two years, while global growth will quicken to 3.2 percent in 2017 and 3.3 percent in 2018, from 2.9 percent this year, analysts project. The RBA will release its quarterly Statement on Monetary Policy on Friday, with updated growth and inflation forecasts.

Asian shares open lower; dollar rattled by U.S. election uncertainty

Asian markets opened lower after Wall Street’s “fear index” spiked on jitters over the U.S. presidential elections.

Australia’s ASX 200 was down 1.01 percent, Japan’s Nikkei 225 dropped 1.13 percent and Korea’s Kospi opened 0.64 percent lower.

The dollar index stood at 97.753, down from 98 levels. The euro rose to a three-week high of $1.1069, the dollar slipped to 104.03 against the yen.

U.S. crude futures were down 0.6 percent, at $46.39 a barrel, after it had settled to $46.67 on Tuesday. Global benchmark Brent was down 0.64 percent at $47.90 after it settled at $48.14

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