By Chris Tedder, Research Analyst FOREX.com

Overnight, the shock announcement from Dublin that it would be holding a referendum on the Eurozone fiscal compact sent the euro plummeting. However, EUR/USD soon regained its composure as it retraced all of its earlier losses, and now the pair is steady climbing higher ahead of tonight's second 3-year LTRO by the ECB.

A recent poll suggests Ireland's referendum may be too close to call, with 40% supporting the treaty and 36% against it. If the vote fails it wouldn't necessarily mean the end of the fiscal compact (only 12 out of 17 signatures are needed). Nevertheless, if the Irish public vote against the fiscal compact it would mean Ireland would not be eligible to tap the ESM (the European rescue fund scheduled to take over from the EFSF in July), which may eliminate Dublin's lender of last resort.

The eyes of the market turned to Australia for the release of a slew of economic data. Overall, the data was fairly mixed, with retail sales coming in at +0.3%m/m (previous -0.1%m/m) but construction work during Q4 decreased 4.6% (exp -0.3%, previous +12.5%) and private sector credit increased slightly less than expectations at 0.2%m/m.

Leading the gain in retail sales was the cafes and restaurants component, increasing 4.3% after a decrease of 1.9% last month. Nonetheless, retail sales aren't out of the woods yet, we expect 2012 we be another year of below-trend growth for retailers.

We don't expect this data will have a huge impact on the RBA's rate decision next week. The bank has already expressed they are comfortable with the domestic macro outlook and current policy stance, adding they will only move to loosen policy further if conditions change in a material way. Thus, with a stable situation in the US and a slightly improving situation in Europe ? some uncertainty surrounding the Eurozone has been removed following the approval of Greece's second bail-out package ? we still think the RBA will leave policy unchanged until later in the year.

In New Zealand, business confidence increased to 28.0 for February according to the NBNZ, slightly higher than the previous figure of 16.9. The data is not typically a major mover, and according the kiwi didn't react significantly to the release. But the kiwi did post a new yearly high around 0.8441 against the dollar later in the session, and if NZD/USD can break through a resistance level around 0.8572 the path looks clear for a push towards the all-time high at around 0.8842.

Midway through the session, the aussie broke through 1.0800 against the dollar and continued to advance, finally posting a high around 1.0825. The next key resistance level for AUD/USD may be the 1.0845 ? the yearly high. However, the results of tonight's LTRO will likely determine the fate of risk sentiment over the next few days, and in-turn the aussie.

The ECB's second 3-year LTRO is almost upon us, with the results being released around 10:30GMT. The market is expecting a take-up of around EUR500 billion, anything less could prove very toxic for risk assets and any more may lead to a relief rally.

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