The local stock market started on a strong footing this morning on the back of better than expected new home sales in the US. This is the second day of positive moves for the local bourse, with base metal prices also lending support.

Despite the positive finish in the US markets overnight, trading volume remains light, which could mean that investors are being cautious despite recent rallies.

Based on the trading pattern yesterday, we may see some tapering off in the local index towards this afternoon. It will be unlikely to see any substantial rise in the absence of strong trading volume.

Thanks to the continuing support from commodity market, stronger commodity performance has pushed commodity related Aussie dollar breaking its 200 day moving average level of the year against the green back. The carry trade activity was also largely boosted by the continuing rise in equity market.

The Japanese Yen has depreciated against most the major currencies, falling to nearly one month low against the Aussie dollar. Technically speaking, the key resistant level shall be the major support level once broken. The Aussie dollar might hold above 90 US cents ahead the local CPI Data on Wednesday, which is one of the major factors that may impact the RBA decision on interest rate movement next month.