Australia: The AUD traded within a tight 60pts range offshore, opening this morning just above USD0.9800. It was a pretty clam session in comparison to the start of the local trade here yesterday when we saw AUD/JPY go into a complete free-fall immediately after the US close amid talk of US and Japanese investment banks triggering huge margin calls. The AUD/JPY crashed from 78.25 to below 75.00 in less than an hour.

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This dragged the AUD/USD off over US1.5 cents towards USD0.9700 at the start of our session, with volatile movements continuing for the remainder of the day. It is expected that today's trade will be dictated by news out of Japan, there is no major data being released locally.

Majors: The JPY fell from a record high against the USD Thursday as fears grew that officials may sell JPY to curb its strength. Earlier the JPY had surged as Japan's natural disaster had rapidly transformed into a nuclear crisis that has worldwide markets in a spin.

In the last week alone, the currency appreciated by more than 8% amid speculation that Japanese institutions were selling foreign assets in order to send money back to the disaster stricken country. However market analysts have also said that widespread risk aversion was leading some
investors to unwind "carry trades" that use the low-yielding Japanese currency to fund high-return riskier positions elsewhere. It is more than likely that we will continue to see this erratic trading until we see the situation under control, which may not be for a while. Elsewhere, positive US data was overshadowed by the Japanese crisis. US CPI rose 0.5% in February, slight better than expectations of a rise of 0.4%. The Philly Fed index rose to a better than expected 43.4, its highest reading since January 1984. While most of the market's attention will remain on Japan today, the market will also be keeping an eye on tensions in the Middle East which continue to deteriorate.

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