Australia: The Australian Dollar reached a post float 28- year high overnight, pushing above parity with the US dollar for the second time in a month.

The record high came after the Reserve Bank of Australia (RBA) raised the cash rate to 4.75% yesterday afternoon, just before the start of the Melbourne Cup!

The AUD nudged above parity twice during the New York session, reaching 1.0023 just after midnight AEDT.

The move has been described as pre-emptive given the high terms of trade and mining investment boom were delivering to the Australian economy an "expansionary shock".

The RBA still think inflation will rise to the top of its target band with more tightening of monetary policy but it's widely expected yesterday's rise means there is breathing space now for future rises until Q1 2011.

The AUD's ascent over parity was relatively short lived, and now the market awaits the FOMC decision tomorrow morning with the market already expecting Quantitative Easing II to be a done deal. The question moreover is how big will it be.

So this morning, AUD opens at 0.9980, and does seem poised to trade at or near parity for the next few days leading up to and after the US Federal Reserve's Open Market Committee (FOMC) meeting tonight.

Majors: US Dollar weakness was prevalent last night again with EUR/USD lifted by the stronger AUD before upward revisions to the European PMI's provided further gains to the EUR.

So good news from the UK came to a halt as UK construction PMI fell to its lowest level for eight months causing GBP to give back some recent gains.

Gold rose on the slip in the USD and oil rallied on the anticipation of QEII. In politics, the Republicans look poised to make significant gains in the mid term elections with voter discontent over the economy driving the gains.

Beyond the FOMC's decision, the market is also looking ahead to other central bank meetings this week which include the Bank of England, European Central Bank and

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