The Australian dollar has continued to surge overnight, buoyed by investor’s appetite for risk. The AUD touched a record high USD1.0374, after getting as high as USD1.0347 during our local trading session.

Australia: Global equity markets stronger performance over the past week has been one of the main contributing factors for the AUD’s rise along with merger and acquisition talk that has been circulating market here in Australia. There has also been speculation that insurance payouts after the Queensland could be a factor contributing to the AUD’s rise, however there has been no firm evidence to back this theory up as yet.

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Investor’s appetite for risk seems to have returned with a vengeance despite the ongoing crises in the Middle East and the continued concerns in Japan about the potential for another disaster with their nuclear reactors. Investors will wait for US non-farm payrolls tonight for further direction; however the AUD is expected to be supported during our local trading session.

Majors: It was a mixed session for the majors overnight following comments from Federal Reserve officials in the US. Minneapolis Federal Reserve Bank President Narayana Kocherkakota said that the Fed may need to increase short-term interest rates by year end if underlying inflation rises as he anticipates. The statement took the market by surprise and pulled the EUR off a near five-month high. However the EUR was able to claw back some ground as traders began to look ahead to next week’s ECB interest rate announcement where it is expected that they will increase rates.

The JPY didn’t perform well against the EUR and USD with the market expecting that interest rates there will remain on hold much longer that previously expected especially after the recent earthquake. The EUR posted a 10-month high against the JPY, while the USD crept back towards postearthquake highs. As well as tonight’s US non-farm payrolls data we have China releasing its Performance of Manufacturing index during today’s Asian session.

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