Australian shares and currency markets are seen taking a step back on Thursday after striking gains yesterday. The continuing strength of the USD will drag on the AUD and commodity-related stocks. However, listed firms with big dollar exposures are likely to gain from this USD-AUD trend.

Analysts are a bit awry on the mix of leads from overnight trades in the U.S. and Europe. The U.S. share markets ended flat on Wednesday as investors took in the last speech of Chinese Premier Wen Jiabao at the closing of the China's National People's Congress with a pessimistic view considering the government's hard stance on property cooling measures.

IG Markets analyst Stan Shamu says that the negative comments of Premier Wen "sent commodities lower and encouraged USD buying. Gold was the biggest loser, dropping over 2% on fading QE III expectations and a stronger USD."

Nonetheless, among the major averages, the Dow Jones Industrial Average was up 0.1% at 13194. The S&P was down two points at 1394 and the NASDAQ added a point to finish at 3041.

The commodities market suffered further losses with the prospect of a subdued property market in China, which drives copper and other commodities sky-rocketing in previous sessions.

"Copper is a major beneficiary of Chinese property development and fears over demand sent it nearly 2% lower. The US dollar also continued to trend higher, which hurt commodities even further. As a result, we expect to see resource stocks come off this morning. BHP's ADR is pointing to a 1.4% drop at the open, and similar falls are likely to extend to the other major resource companies," the market strategist points out.

CMC Markets analyst Miguel Audencial agrees that "the Australian market is most likely be pulled down by the materials sector due to weaker commodity prices caused by a higher US dollar."

Mr. Audencial is bullish that oil prices will remain at a high in the medium term "with demand likely to be strong due to recent reports of strong US employment and retail sales data. Supply issues from Iran are also still lingering."

The local share market will continue its struggle to breach the 4295-4310 zone. C

Currency-sensitive stocks with high USD exposure to watch out for are CSL Limited, James Hardie, Resmed and Billabong.

There is a scheduled release of the MI inflation expectations and new motor vehicle sales data.

Analysts are also bullish on the Japanese Nikkei's performance today because the yen rallied to 83.83 overnight against the USD.

Market

Price at 8:30am AEST

Change Since Australian Market Close

Percentage Change

AUD/USD

1.0453

-0.0094

-0.89%

ASX (cash)

4263

-24

-0.56%

US DOW (cash)

13164

-8

-0.06%

US S&P (cash)

1391.0

-4

-0.29%

UK FTSE (cash)

5931.0

-62

-1.03%

German DAX (cash)

7072.0

40

0.57%

Japan 225 (cash)

10073

22

0.22%

Rio Tinto Plc (London)

34.80

-0.53

-1.50%

BHP Billiton Plc (London)

20.01

-0.46

-2.25%

BHP Billiton Ltd. ADR (US) (AUD)

35.10

-0.51

-1.43%

US Light Crude Oil (Apr)

105.43

-1.36

-1.27%

Gold (spot)

1644.0

-35.0

-2.08%

Aluminium (London)

2229.00

-30

-1.33%

Copper (London)

8465.00

-93

-1.09%

Nickel (London)

19575.00

125

0.64%

Zinc (London)

2074.00

-36

-1.71%

RBA Cash Rate to be decreased by 25bp (Apr) (%)

31.00

0

0.00%

IG Markets provides round-the-clock CFD trading on currencies, indices and commodities. The levels quoted in this email are the latest tradeable price for each market. The net change for each market is referenced from the corresponding tradeable level at yesterday's close of the ASX. These levels are specifically tailored for the Australian trader and take into account the 24hr nature of global markets.

Please contact IG Markets if you require market commentary or the latest dealing price.