Australia: After a relatively quiet trading session for the AUD overnight, the local unit continues to retain its bid tone this morning, currently trading just below USD0.9400.

After reaching a two year high around USD0.9450 yesterday, the AUD was sold back down on the news out of Japan that the Bank of Japan was intervening in currency markets in order to weaken the JPY.

The AUD weakens on such a move as the Japanese buy the USD and sell JPY, with the USD strength flowing through into our market and forcing the AUD lower.

There are rumours that the BoJ may act again today if it feels the need, with such a move likely to push the AUD lower in the short term.

For any importers looking to buy the JPY against the AUD it is worth noting that AUD/JPY is back above JPY80.00 this morning.

The RBNZ left official interest rates unchanged at 3.0% at their meeting earlier this morning, with the accompanying statement suggesting interest rates will be on hold in New Zealand for at least the rest of this year.

Majors: The big news in currency markets yesterday was the unexpected intervention from the Bank of Japan.

It is rumoured that the Japanese may have purchased upwards of USD23bio throughout yesterday's session, the largest one-day intervention on record.

Prior to the move, the JPY had been trading close to 15-year highs against the USD after investors had been consistently pouring into the JPY as the USD began to lose its appeal as a "safe haven" currency.

The strength of the JPY has been of a major concern to the Japanese government as it means their exporters increasingly struggle to remain competitive.

As a result of the move, USD/JPY rallied by over 3%, but many are now questioning whether the BoJ can really be effective in turning around the USD weakness in the medium to long term.

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