Australia: Renewed concerns over European sovereign debt pushed the AUD back below parity overnight.

Investor demand for higher yielding assets weakened overnight on the back of reports that Ireland may be forced
to seek a bailout from the European Union.

The size of Ireland's debt has caused bond spreads and credit default swaps to blow out to record levels.

For example the spread on Irish 10 year securities over German bunds is trading at an all time high of 6.0%.

This has caused many to question the wisdom of rushing into the EUR ahead of the USD, even despite the current state of the US
economy.

The AUD fell in sympathy with the EUR early in the offshore session but managed to rally back through parity later in the session on the rebound in US equity markets.

The markets today will be firmly focused on the employment data due out later this morning.

We will also see the release today of some key Chinese data, including PPI, CPI, retail sales and industrial production.

Majors: The US dollar advanced solidly against the EUR on the European debt concerns and some better than expected data out of the US overnight.

The US trade deficit improved marginally to US$44bln, down from US$46.5 the previous month.

US Jobless Claims also were better than expected, with the actual result coming in at 435k as opposed to an expected 450k. Crude oil was up over USD88 per barrel overnight on a report showing a larger than expected drop in inventories.

The majority of base metals were lower due to concerns over future demand out of China, with copper falling 1.1%, zinc off by
2.1% and nickel down by 1.9%.

The G20 meeting in Seoul this week has the potential to cause market volatility as imbalances in global currency markets will surely be a hot topic.

The US has been facing increasing criticism over the weakness in the US dollar, which has been further exacerbated by last weeks Federal Reserve cash splash.

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