Australia: The AUD maintained its bid tone overnight, supported above USD0.9350 amid continuing USD weakness and EUR strength.

It's been a very strong week for the AUD, rally through USD0.9450 before settling back near USD0.9400 over the last 48 hours.

Mixed data out of the US overnight kept pressure on the USD, while the EUR broke through key resistance near $1.3075.

The risk the US will renew their quantitative easing is keeping the higher yielding currencies well supported, while further Bank of Japan JPY intervention will be watched closely as they have signalled there may be a second round on the cards to stem the JPY strength.

With the lack of any local data due today, the AUD is expected to consolidate within in recent range.

Majors: The USD held onto its sharp gains against the JPY but fell against the EUR Thursday as investors still questioned the possibility of another round of quantitative easing in the US.

Data out of the US was broadly in line with expectations, most encouragingly were weekly jobless claims which were slightly lower at 450k, compared with the expected 459k.

US equities had a mixed session, lower initially before recovering on the back of the improving employment and manufacturing data. The DOW gained 0.2% to 10595.

Meanwhile, Treasury Secretary Timothy Geither said in Congressional testimony on Thursday that China's move toward a more flexible exchange rate has been "too slow". However he was very reluctant to formally label China a currency manipulator.

China's Yuan rose to its strongest level since it began trading in 1994, the fourth consecutive session in which the Yuan has hit an intra-day high. Tonight investors will turn their focus to US CPI data for August.

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