Australia: The Australian dollar has opened lower thismorning as investor's concerns about China weighed onthe local currency.

The AUD opened at USD0.9880, downfrom USD1.0004 at yesterday's open as the marketdigested the latest Chinese data releases.

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Although thedata showed that inflation had moderated at 4.6% YoY inDecember from 5.1% in November, monthly inflationremained strong at 0.5% and continues to trend upwards.This saw investor speculating that we may see moreaggressive tightening by the PBoC in 2011 in a bid to geta hold of inflation before it's too late.

The AUD was sold offas investors viewed the prospect of further monetarypolicy tightening in China as a negative for the commoditycurrency.

Also weighing on the AUD was better thanexpected US data which continues to suggest that the USrecovery remains on track. Today we have Import/ExportPrice Index data for Q4.

Majors: The USD was stronger overnight as better thanexpected US data painted another positive recoverypicture for the US. Jobless claims fell by 37k to 404k,better than expectations which investors are hoping willlead to a better jobs number in the next monthly payrollrelease.

Existing home sales jumped to 5.28mn from4.68mn, well above market expectations. Investorsconcerns about China also helped the USD as investorssought safe haven on concerns that the China will put thebrakes on its massive economy.

US equities were initiallysold off, following leads from Asian stocks on Chinaconcerns, however the stronger US data and earningsresults from JP Morgan (up 2%) helped the Dow recoverits earlier losses.

We saw oil and gold easing off recenthighs, also weighed down by the stronger USD. There isno major data being released in the US tonight.

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