Australia: While the AUD took a breather yesterday, worn out after its assault on parity over the last few weeks, the break was not for long.

The AUD has opened this morning one cent higher after a boost in confidence saw commodity currencies such as the AUD become attractive again.

This morning the AUD was trading at USD0.9870, after yesterday reaching a low of USD0.9664. The US equity markets rebounded (the DOW was up 1.2%) on the news of positive earnings reports, further talks about quantitative easing and the release of the Fed's Beige
Book.

While the talk of quantitative easing in the US and equity markets have been an important driver in the AUD's recent strength, today markets will be focusing on the release of a raft of Chinese data, especially after their announcement during Tuesday's offshore session of an increase in their lending rates.

Today will see the release of China's GDP, CPI, industrial production as well as the retail sales data; with all data released at 1pm AEST.

Many are predicting some pretty strong results, especially after Tuesday's rate increase, so we could see the AUD once again head toward the USD1.0000 level.

Majors: As mentioned above, some positive earnings results and QE talk saw risk back on the table. Earnings results from Yahoo and Boeing were greater than investors were expecting so boosted confidence in the markets.

Also a leaked report from an advisory company reported that the Fed is looking to extend its QE after its November meeting by purchasing USD500bio of US Treasuries over a six month period.

The Bank of England last night released its minutes which showed that there is some disagreement in the ranks as to what is best for the UK economy. While some believe that the UK should follow the US and introduce some form of QE, there are also members of the group who believe that increasing interest rates is the next move.

But the movement may be towards QE as last night also saw the release of the governments spending review which has the objective of
cutting its budget deficit, and plans to do so by significantly cutting spending.

The GBP/USD has reacted positively to the news opening this morning USD1.5835.

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