Australia: The AUD continues to break hit new highs as the strengthening equity markets and higher commodity prices see investors increase their demand for riskier currency such as the AUD. The quiet New Year weekend did little to stop the AUD rising to USD1.0253 on New Years Eve; the highest level since the AUD was floated in December 1983. It was unable to hold onto these levels and is now back to where it was sitting last week, currently trading around USD1.0160. Some positive data releases out of the US has signaled that the US economy may be on the improve which has caused the DOW to strengthen overnight by 0.8% to 11,671. Commodity prices were also stronger with both gold and oil rising consistently. Since Christmas Eve, gold prices have continued to increase, at times by as much at 2.9% and oil has sustained prices over the break above USD91.00 / barrel. With many still enjoying the Christmas break, it’s likely that the AUD will remain in a fairly tight trading range and follow the lead from the local equity markets.

Majors: As mentioned above, the positive data released from the US on Friday has shown that there are signs that the economy may be stabilizing. The US Institute Supply Management’s index of US Manufacturing activity saw the new order index rise 4.3 to 60.9 and also saw production to 60.7. Construction spending also rose 0.4% in November. The EUR/USD weakened during late trading; erasing gains after the encouraging US data saw demand for the EUR increase. It is currently trading around USD1.3360. The GBP/USD has also been tracking the EUR over the break, but overall has under performed. Some data to be released out of the UK tonight including PMI Manufacturing could see the GBP break the trend.

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