Bell FX, IG Markets, Rivkin Securities Dollar Outlook. The Australian Dollar has rallied to its highest level in over a week following gains on global share markets overnight, but this morning it has slowed a bit to at US$1.0347 (8:15 AEST), but seen to make a rebound in later day trade on the back of a weaker US Dollar pre-empting more stimulus to be declared by the Federal Reserve.

Australia: The AUD rose to 103.60 US cents early this morning as offshore equity markets rallied, shrugging off recent economic concerns, according to Bell FX analyst Ms Leanne Terrett in an emailed statement.

"The NZD also benefited, rallying just over 1% from yesterday's close. The rise of the AUD has put it back within recent ranges and it's expected to stay firm as we head into next week's RBA interest rate decision," Ms Terrett added.

With commodities recovering, AUD/USD charged to a high of 1.0355 and remains fairly resilient ahead of private sector credit data. USD/JPY briefly popped above 98 to a high of 98.20, but remains relatively range-bound at the moment.

With commodities recovering, AUD/USD charged to a high of 1.0355 and remains fairly resilient ahead of private sector credit data, noted IG Markets Securities Stan Shamu.

Mr. Shamu said that some gains were seen in the USD/JPY pair rising above 98 to a high of 98.20, but remains relatively range-bound at the moment.

"Perhaps Japan returning to trade today will have an impact on the pair and will provide some leads for the region. Today we get Japan's manufacturing PMI, household spending, unemployment rate, industrial production and retail sales. China is out of action until Thursday," added Mr. Shamu.

Majors. U.S. economic data continues to hit a sweet spot where it isn't worryingly weak, but is weak enough to keep the Fed on its toes on the QE front, the analysts said.

The rise in the commodity markets and the weakening of the U.S. dollar had been bound on the expectations that the Federal Reserve will maintain its stimulus program helped spur gains in WTI crude oil Monday, narrowing its discount on Brent oil to just $9.18, explained Rivkin Securities global analyst Mr. Timothy Radford

"WTI crude future for June delivery advanced US$1.50, or 1.61 percent, to settle at US$94.50. Normally we see a strong negative correlation between WTI oil on the U.S. dollar index, but for most of April correlation levels have been strongly positive. However, since the recent rally in crude oil prices, the correlation has again turned negative, a possible sign of increasing future inflation expectations for the U.S. economy," Mr. Radford noted.

Spot gold continued its march back above US$1,400 overnight, rising US$13.92 or 0.95 percent, to settle at US$1,475.84 as market participants bet the Federal Reserve will extend its stimulus program and that the ECB will cut its refinancing rate on Thursday.

With subdued inflation levels while unemployment remains elevated, there is a strong case for the Federal Reserve to continue stimulating the economy with its US$85 billion per month bond buying program.

But with a division in opinion amongst Fed board members over whether stimulus is actually benefiting the economy, there is always a risk the current policy setting may end sooner than expected.

We'll be looking for signs or growing rhetoric from Chairman Ben Bernanke of when a possible end to stimulus could occur. Any indication of a sooner-than-expected end to QE3/4 would likely send risk assets sharply lower.

ECONOMIC CALENDAR

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