Bell FX Currency Outlook: The recent rally in the AUD was further extended overnight with the local unit pushing back through USD1.0700.

Australia: Stronger than expected manufacturing data releases out of the US, China and Europe led to an improvement in investor appetite, which in turn sparked a round of buying in the equity and commodity markets.

Commodity currencies, such as the AUD and NZD, were caught up in the renewed optimism, with some market observers looking for further strength over the coming days as hopes grow that the outlook for the global economy is improving.

The Australian dollar managed to record a gain of just over 1% against the USD, while also recording solid gains on the crosses.

Of interest to the local market today will be the release of Australian trade balance and building approvals data, both for the month of December. Market expectations are for building approvals to be up by 2.0% from the previous month, while the trade balance figure is expected to come in at around +$1.2B for the month of December.

Majors: Better than expected Chinese PMI figures released during yesterday's Asian session, (50.5 in January up from 50.3 in December), created an initial feeling of optimism in financial markets leading into the offshore session. The improvement in investor risk appetite was further consolidated following news that the US Institute for Supply Management's manufacturing index rose to 54.1 in January from 53.1 in December.

Eurozone PMI, and in particular German PMI, releases were also viewed favourably. Investor concerns in relation to the European debt crisis appear to be easing and rumours are emerging that Greece is nearing agreement with its creditors to avoid default.

Market attention will be firmly focused on the US tonight as a series of data, including jobless claims, vehicle sales and chain store sales are due for release. The US Federal Reserve's Ben Bernanke is also due to testify before the US House Budget Committee.

Economic Calendar
02 FEB AU Building Approvals DEC
AU Trade Balance DEC
EU Euro-zone PPI
US Total Vehicle Sales JAN