Australia: The Australian dollar has rallied more than half a US cent overnight on the back of gains in equity markets in Europe and the US. The AUD rallied to a high of USD0.8684, driven by stronger equity markets and investor confidence. The FTSE finished higher for the 7th straight day, while the Dow closed 24.71 points higher when markets settled. Some further clarity about the sovereign debt situation in Europe also boosted confidence. The European Union’s executive said it will propose sanctions on governments that break rules on debt and deficits as part of an overhaul of economy oversight. A firm result in a bond auction in Spain also helped with confidence in the Euro-zone and helped curb fears that the country could be headed towards a Greek-style spiral. With no key data due for release in Australia today, the market is expecting the AUD to push higher towards USD0.8700, with any dips backs towards USD0.8600 likely to well supported.
Majors: The EUR rose against the USD on Thursday night as the demand for risk increased on the back of an increase in investor confidence. As mentioned above, a successful bond auction in Spain and further clarification from the EU’s executive on proposed sanctions on governments who break the rules on debt and deficits helped to restore a demand for risk in offshore trading. The EUR peaked at $1.2413 but did fall back slightly when initial jobless claims in the US printed a little higher than expected. The GBP/USD rallied after an increase in UK retail sales boosted expectations that the UK’s economic recovery would be faster than forecast. With no major data due for release offshore tonight, the market is expected to take direction from equity markets and any further news out of Europe.