After a very strong run in recent weeks, the AUD has taken a breather overnight,with a drop in commodity prices and a stronger USD pulling the AUD back belowthe USD1.0500 level.

Australia: A lack of data released overnight saw the AUD follow the moments ofthe equity markets and commodities. Oil was the major commodity to post adecrease with the price falling 3.6% to close at USD108.72. The fall came afterthe price of oil hit a 30month high yesterday. Overnight the IMF warned that thehigher oil prices could seriously damage the global economy.

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Reports out ofLibya can also explain the drop in prices after it stated that Gaddafi has accepteda 'road map' to a ceasefire from a delegation of African leaders. And although therebel leaders rejected the proposal as it didn't result in Gaddafi stepping down, ithas given the global economy hope that the oil exporters will resume once thefighting stops.

US equity markets were also slightly weaker overnight asinvestors take their positions prior to the US earnings season which starts thismorning with Alcoa's profit results. Today locally we have the release of the NABbusiness confidence. After a high result last month, today we could see a pullback as businesses digest the spate of recent natural disasters as well as thehigher AUD.

Majors: The IMF released updated forecasts overnight which didn't see anyimprovements in their expectations for global growth. For 2011 and 2012 growthin the world economy is expected to be 4.4% and 4.5% respectively. While theglobal growth figures weren't changed, there was a slight downgrade in the USgrowth for 2011 with it expected to grow around 2.8%.

Looking at the other majorcrosses, the EUR/USD looks like it has stalled ahead of a raft of data due outlater this week. Germany's ZEW confidence survey is due out this evening, aswell as the UK CPI data. US retail sales and a large amount of Chinese data duelater in the week could also see the EUR/USD to push through its recent barrierof USD1.4500. The GBP/USD weakened overnight as investors wait for tonight'sCPI data release for March.

With the European Central Bank increasing theirinterest rates last week, the markets are waiting to see whether the Bank ofEngland may have a case to head down the same road in the near future. TheGBP/USD opened this morning at USD1.6340

Economic Calendar 12 APR

Aust: NAB Business Confidence

US: Trade Balance

US: Import Price Index

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