In the US, Ben Bernanke, Federal Reserve Chairman, is due to testify in Washington DC.

The Australian economy, with its great dependence on exports, has been hit hard by the global economic slowdown, but now finds itself well-prepared for an improvement in the global economy, especially that of the US. The aussie has benefitted from this, and has been an exceptional performer in 2012.

After a sluggish 2011, the Australian economy is expected to post a respectable growth rate of  4 per cent in 2012. The news from down under is not all good however, as the debt crisis in Europe will wipe out $20 billion from expected revenue over the next four years. The outlook for the Aussie is cautiously positive, as there is renewed hope that European leaders will act forcefully to get the debt crisis under control.

In the US, Daniel Tarullo, Federal Reserve Governor, is about to speak in Washington DC.

The fragile Australian economy continues to struggle with the global slowdown and lower demand from China. In addition, the euro zone debt crisis is threatening to spill over into Australia by pushing up bank funding costs and causing European banks to reduce their exposure to Asia.

Non-Farm Payrolls came out as expected, but the surprising drop in the unemployment rate provided a lot of hope. Also CB Consumer Confidence exceeded expectations with more than 15 point rise reaching 56.0 following months of decline. Can the US economy lead the world once again? There are doubts. Let’s Start

In the US, ISM Manufacturing PMI and important Manufacturing activity gauge, increased more than predicted to 51.6 in September after reaching 50.6 inAugust. A further rise to 52.3 is expected now.

The moderate rise in prices leaves room for a rate cut that will weaken the Aussie. On the other hand, the fresh signs of strength from China helped the Australian dollar. We have more data from China alongside Australian data.

Last week the US economy grew at an annual pace of 2.5% in Q3 2011, slightly higher than the 2.4% growth expected and US weekly unemployment claims also came close to the 400K predicted with a reading of 402K. Meanwhile Progress on Europe’s debt crisis achieved at the EU summit in Brussels when Italian Prime Minister Silvio Berlusconi presented a plan of economic reforms in reply to the EU ultimatum demanding swift action to boost growth and reduce Italy’s huge public debt. Greece will be under close supervision while implementing the required reforms and in turn the bailout deal to Greece will wave off 50% ofGreece’s bond debt to banks. Will this dramatic week be a turning point for the EU economy and how will this affect global markets?

In the US, Ben Bernanke testifies at the Joint Economic Committee, in Washington DC. His words have a major impact on the market.