Australia: Improved risk appetite and yield differentials came into play again as stock markets held their recent gains. The AUD's fresh high may receive another boost today with the release of the employment data at 11.30am AEST.

Consensus is a 24k increase in employment in March, which would see a decline in unemployment to 4.9%, and this modest rebound in employment would be welcomed following the floods in Queensland earlier this year. If the employment result is better than forecast, then one would expect the AUD to be even further supported.

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The AUD doesn't seem to be showing any signs of weakening "yet", ultimately, at some stage, it needs to breathe and catch its breath, but for now, it does seem likely to stay strong.

Parity may be the new "USD 0.7500" as some are saying and structural rather than cyclical factors are being talked of more often now, relation to the USD as well as the AUD. Food for thought.

Majors: There were no major data releases in the US overnight and the markets scrutinised various comments by Fed officials Bullard and Lockhart.

Bullard is in favour of reducing QEII by US$100bn at the FOMC meeting in April, but he acknowledges he is in the minority on this one. It seems those who favour the completion of QEII are outweighing the "Bullards" of the FOMC.

Lockhart (a non voting member) said he does not expect the Fed to tighten by the end of the year saying "I wouldn't rule it out entirely but at this stage I personally am not leaning in the direction of thinking that it is absolutely required".

Interest rates will be all the focus tonight with the ECB and BOE making their announcements. The ECB is widely expected to hike rates whilst the BOE is expected to keep rates on hold. ECB Trichet has been hinting at inflationary pressures and the need for "strong vigilance" for some time now and the EUR has managed to rally almost 5 cents since.

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