Investors eye China's PMI as Fed's move keeps lifting stocks THE decision by the US Federal Reserve last week to maintain monetary stimulus will continue to have a positive effect on the Australian market this week but is likely to increase the strength of the Aussie dollar, which could give the Reserve Bank cause to consider another interest rate cut. UBS chief economist Scott Haslem said that the Federal Reserve decision was "unambiguously positive for growth" and ensured interest rates would stay lower for longer. "We did see a bit of a relief rally from markets, with equities rising and bond yields coming off on the back of the delay of the tapering from the Fed," Mr Haslem said. There has been a fairly positive market response to that. I think what is going to impact markets now is the question of whether the tapering has been delayed for a few months or a lot longer. It's a fairly positive backdrop to growth -- the idea that interest rates are going to stay lower for a lot longer. But Mr Haslem said the stimulus could push the Australian dollar above US95c, which could force the Reserve Bank to cut interest rates again. The rise in the Australian dollar is certainly not helpful in terms of rebalancing the economy. I'm not sure that US95c is the worry point for the RBA, but I think if we did see a significant move higher in the Australian dollar, back towards parity, then it does increase the likelihood that the RBA will cut again. AMP chief economist Shane Oliver said local markets could be boosted today when purchasing managers' indexes were released in China, Europe and the US, with figures set to show China was on the mend. This week, the RBA will release its Financial Stability Review, which Mr Haslem said would indicate whether the RBA felt the Australian property market had become overheated. What people will be looking for will be any comments on the housing sector and any risk the housing sector might be starting to look a little too frothy. I'm not sure we'll necessarily see that, but as we saw in the minutes of the RBA, I think we'll see the RBA encouraging our key lenders to not see their lending standards drop. Dr Oliver said it might raise some issues about the need to maintain prudent lending standards in a rising property market. Overall, he said, the big question was whether sharemarkets had run a bit too hard and too fast. With these debt ceiling negotiations on the way in the US, it's quite possible we might have a bit of a speed bump or correction over the next month or so. Australian markets are expected to open down today with the benchmark S&P/ASX 200 to drop 23 points, according to the futures market, after US stocks gave up some of their mid-week gains to close lower on Friday. The Dow Jones Industrial Average fell 185.46 points, or 1.19 per cent, and the S&P 500 shed 23. The S&P/ASX 200 is still trading at five-year highs, closing at 5295.6 points on Thursday before slipping back 18.9 points in trading on Friday.