Australia: The AUD took a bit of a tumble yesterday after the release of Q4 GDP figures.

Australia's GDP rose by 0.7% in Q4, marginally below expectations. The next release for Q1is widely expected to be flat, given the impact of widespread flooding throughout the summer. The AUD's fortunes were reversed overnight as a strengthening EUR helped to drag the local unit higher. The EUR has rallied strongly ahead of tonight's ECB meeting when it is widely anticipated ECB President Trichet may hint about the potential for raising Euro zone official interest rates.

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Locally today we have the release of international trade and building approvals data. Market expectations are for Australia's trade surplus to have fallen to $A1.5bn in January, with building approvals forecast to have declined by 3.3% in January. The AUD is finding it tough going above the USD1.0200 region and will need to see some significant upside momentum if it is to break through the previous high around USD1.0250. AUD/NZD has had a solid rally over the last 24hours after the NZ Prime Minister suggested the RBNZ may have to cut interest rates to help the NZ economy cope with the impact of the Christchurch earthquake.

Majors: The Euro rose to a four month high against the USD overnight as interest rate differentials between the Euro zone and the US continue to widen. In his address to the US Congress overnight, Federal Reserve Chairman Ben Bernanke, reiterated the need to keep US interest rates at record low levels in the ongoing fight to try and stimulate the US economy. With US unemployment still sitting stubbornly close to 10%, and not showing any signs of falling anytime soon, US interest rates will remain low for the foreseeable future. In contrast to the US situation, ECB officials have been hinting of late that key interest rates may soon need to be raised in order to contain inflationary pressures. Higher European interest rates make EUR assets more attractive, effectively driving the EUR higher. While the ECB is not expected to announce any interest rate increases at tonight's meeting, ECB President Trichet's comments will be carefully analysed by the markets.

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