Australia: The Australian Dollar has opened little changed and is still starts with a 9 as global markets seem to be becoming cautiously optimistic about the economy in the latter half of calendar 2010.
This is not to say fears of another financial crisis, sovereign risk, or a double dip recession has abated, not at all.
However, markets do seem to be taking the release here and there of weak data in their stride moreso than 6 months ago, and there is a focus on strong earnings in the corporate sector to drive growth.
The AUD traded as high as USD0.9069, the currency's highest level since 10 May, on the back of strong European equity markets but tracked back again in the US session in a more mixed stock environment. Cross rates were fairly flat with most gains against the Greenback.
There is a significant focus, locally, on the release of the Consumer Price Index (CPI) report for the June quarter today at 11.30am AEST for a further guide on interest rates settings going forward.
A strong inflation reading could prompt the RBA to lift the official cash rate by 0.25% to 4.75% at the next Board meeting on Tuesday 3 August s it continues to use monetary policy to manage inflation within the target band of 2 to 3% over the economic cycle.
Consensus for the CPI is expected to have risen by 1.0% in the June quarter, which will provide an annual rate of 3.4%.
It is worth noting the median forecast for underlying inflation, which removes volatile price movements, is for a 0.8% rise in the June quarter for an annual rate of 3.0%.
We see the AUD staying fairly steady ahead of the release with upside risk to as far as 0.9150 today.
Majors: The US Dollar was mixed overnight with EUR/USD rallying amongst the strong showing in the equity markets and reports of strong German consumer confidence.
GBP/USD was strong and broke the 200 day moving average of 1.555.
The JPY and CHF, which have been strong for some time (safe haven) came under pressure against the USD overnight, which had been foreseen by the markets for a while.
Better than expected earnings by Du Pont and Lexmark drove the US stock market higher but poor consumer confidence figures erased these early gains and the DJIA ended the session at 10,538, up a slight 0.1%.