Australia: The Australian Dollar has had a strong run overnight to be trading just below USD0.8500 following a positive lead on equity markets. The investor theme turned positive during the local session late yesterday when rumours that China where going to stop buying EURO bonds, which had influenced the market in the previous trading session, where dismissed by the Chinese officials. This news saw demand for the AUD increase as investors increased their risk appetite for higher yielding assets. The AUD was stronger on the cross-rates as well with the AUD/JPY trading above 77.00 while the AUD/EUR and AUD/GBP trading at EUR0.6890 and GBP0.5850 respectively. Base metals ended the session higher on improving US economy expectations while copper trading up 3.0%. Zinc, aluminium and lead also rallied 2.6%, 2.5% and 5.3% respectively. With no local data due for release today, the AUD should follow the positive lead from equity markets, therefore we expect the AUD to hold above the 0.8400 level.

Majors: Positive news around the globe saw equity markets post gains overnight, with the DOW ending the session up 2.9% at 10259. The S&P500 finished the day up 3.3% at 1103 and the Nasdaq up 3.7% to 2278. Energy shares rallied as BP Plc reported that it may have temporarily stopped the flow of oil from the Gulf of Mexico leak. Continued positive data releases in the US have mostlybeen overshadowed the past few weeks given the concern on the European debit crisis, though last night more positive news released was taken onboard by investors as they looked past the issues in Europe. US Initial Jobless Claims and for the week ending 22 May fell 14,000 to a seasonally adjusted 460,000. The US GDP reported growth of 3.0% in the first quarter slightly lower than expectations.