After showing some slight weakness during yesterday’s local session, the AUD has once again outperformed during the offshore session, pushing through USD1.0100 overnight on the back of higher commodity prices and a positive night on the offshore equity markets.

Australia: Overnight oil pushed up 1.6% to a level above USD1.0500; heading towards a two year high as air strikes in Libya continued. Gold also had a positive night up 1%. The AUD is now back to its pre-Japanese natural disaster levels with renewed confidence in the market that the impact on the world economy is likely to be not as bad as first thought.

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Recent thoughts in the market about a rate cut by the RBA have now diminished, and should commodity prices continue to rise we could see the AUD push towards the highs above USD1.0200. Today sees the release of the RBA’s Financial Stability Review, but with it not expected to bring any new news to the markets it’s unlikely to have much of an impact on the AUD.

Majors: The US housing market continues to struggle. After a poor existing home sales result on Monday night, new home sales for February also posted a significant fall overnight. The number of new home sales dropped 16.9% which was well below the market expectations of a 2.1% rise.

The EUR/USD fell below the USD1.4200 level as Portugal’s parliament rejected the new budget curbing measures in the hope to restore the country’s economy. As Portugal is one of the Euro-zone’s most financially vulnerable economies, this only fuelled concerns that the euro-zone’s fiscal woes remain unsolved. This, as well as news that the EU leaders may delay the decision on the European Financial Stability Facility bailout fund weakened the EUR.

Earlier in the week it was thought that a decision would be made at this weeks EU summit, but it’s been reported that a decision will now
not be made until June.

Economic Calendar: March 24

NZ: GDP 4Q
AU: RBA Financial Stability Review
UK: Retail Sales Feb
US: Durable Goods Orders Feb

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