Australia: The AUD rallied to a fresh post-float high overnight of USD0.9937. It now seems to be a case of when, rather than if, the AUD will break parity. Some in the market are predicting the AUD will break through USD1.0000 before the end of the week.

Yesterday's Chinese trade figures, which showed a trade surplus marginally below expectations, were supportive of the local unit as clearly the Chinese economy continues to perform strongly. Given the bullish offshore leads for the equity markets, expect the AUD to remain well supportedon any dips today.

The recent rally in the AUD has been attracting a lot of media attention and Australian exporters, particularly those who are not benefiting from soaring commodity prices, are keen to convey their message about the impact a high AUD has on their ability to compete internationally. Unlike the Bank of Japan, the Reserve Bank of Australia appears reluctant to intervene in the market to try and temper the AUD's strength.

Majors: The USD continues to lose ground against most of the other major crosses on expectations the US Federal Reserve will increase bond purchases to further support the US economic recovery. Such moves would send US interest rates even lower than they currently are, further reducing the attractiveness of holding the USD over other currencies. With higher yields available in other parts of the world, investors are turning to the JPY, EUR, GBP, AUD etc ahead of the USD.

Equity markets on both sides of the Atlantic moved higher overnight after better than expected corporate earnings results from Intel and JP Morgan. Crude oil prices were also higher after Chinareported record crude imports in September. Market attention is now turning to tonight's US data releases, which include PPI, trade balance and weekly jobless claims.