Aussie Shines On Risk Appetite, Markets Optimistic On US Debt Deal

Asian markets are generally higher today, following another day of rebound in DOW on optimism that US politicians are close to a deal in the debt limit negotiation. Majority Leader Harry Reid, a Democrat, said that he was "very optimistic" about the "constructive, good-faith negotiations". Meanwhile, Senate Minority Leader Mitch McConnell expected to "get a result that will be acceptable to both sides". The meeting between President Obama and Congressional leaders was postponed so as to, according to the White House, "allow leaders in the Senate time to continue making important progress towards a solution that raises the debt limit and reopens the government". Meanwhile, it's reported that the a deal under consideration was one that would fund federal agencies until January 15 next year and increase the debt limit until February 15. It is expected that Republicans would soften their stance as polls showed that many people disproved how they handled the issue.

Released in Asian session, the RBA minutes for the October meeting suggested that policymakers acknowledged the impact of previous rate cuts on economic activities. Yet, they reiterated further easing could not be ruled out. As stated in the minutes, "the effect of low interest rates was evident across a range of indicators and had further to run". Meanwhile, "members agreed that the bank should again neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them". Markets perceived the minutes as a sign that RBA is gradually stepping away from another rate cut.

In the currency markets, the Kiwi and Aussie are the strongest major currencies this week so far on solid risk sentiments. Dollar, yen and swiss franc are the weakest. Nonetheless, note that the greenback is held in tight range against European majors and the tide could easily turn among them.

EU finance ministers are due to vote today for a bill approving the ECB to supervise the banks in the region. The UK has eventually lifted its objections to the matter. ECB Executive Board member Joerg Asmussen said he's very confidence that the bill would be passed. According to him, the EU is "making slow but steady progress on all elements of the banking union". If there is "a sound legal base created", the union would "speed up preparations, can hire people, can hire buildings, so this is really good news on the banking union". Meanwhile, finance ministers have also discussed the progress of member nations that have been bailed out. It is expected that Ireland would finalize the bailout program in November whilst future financing for Greece in December or January would be discussed. Asmussen suggested that Greece would need 5-6B euro in the second half of next year while Greek Finance Minister Stournaras suggested that 10.5B euro would be needed by the end of 2015.

Looking ahead, UK inflation data will be a focus in European with PPI and CPI featured. The eurozone will release ZEW economic sentiment. US will release Empire State manufacturing index.