Australia: The Australian Dollar has opened lower today after a weak night in US equities driven by renewed concern about the price of oil with a 4% rise in WTI and Brent oil.

Middle East geo political risk continues, the Saudi stock market fell a whopping 6.8% overnight and is now 16% lower with concerns the unrest could spread as far as the Kingdom itself. If the unrest spreads to Iran, this would be OPEC's 2nd largest producer and one of the largest shocks to oil supply in history. A temporary spike in oil prices is manageable for the world economy but costs will start to mount for more enduring price increases. Looking at safe haven flows, gold rose 1.3%, US Treasuries rallied slightly and of real interest to our readers was the rise in the USD index and the resulting fall in the AUD against the Greenback. Looking at local news, Australia's GDP data for Q4 2010 will be released today at 11.30am AEST with forecasts for an increase in economic growth of 0.7% (2.8% yoy) and this is in line with the RBA's forecast in the February Statement on Monetary Policy and importantly is not regarded as being an indicator of a strengthening economy. The RBA's decision to leave interest rates on hold yesterday at 4.75% was not a surprise and we see AUD holding in a tight range today ahead of today's release and important data out of the US on Friday.

Majors: As reported above, the USD Index rose on the back of safe haven flows.

Federal Chairman Bernanke testified and recognised the "tentative recovery" had become self sustaining and that he does not expect rising commodity prices to be a persistent problem for US inflation and still expects it to be several years before unemployment returns to normal levels. The seven lean years that many spoke of in the aftermath of the GFC ring loud and clear in the US. Tonight sees the US ADP employment index ahead of non farm payrolls on Friday and the we also have the Fed's beige Book tonight. Euro Zone producer price data ahead of their rate meeting on Thursday will be of interest too.

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