US equity markets rallied overnight as confidence surged on the back of stronger manufacturing data and better than expected earnings from Exxon Mobile, with the greenback wearing the brunt of the latest surge in optimism. The US dollar index which measures the dollar's value relative to six major foreign currencies is currently trading .31 per cent lower at 79.20. The ISM Manufacturing index recorded strong growth in January with a reading of 58.4 against the predicted reading of 55.5. Personal Income surpassed expectation recording growth of 0.4 per cent for the month of December, against the upward revision of 0.5 per cent in November.

Locally, after dropping through 88 US cents in yesterday's trading, the Aussie dollar surged through two big figures overnight to current session highs 89.2 US cents, taking the lead from Gold which leapt back above US1100 a troy ounce. Economic news today includes the NAB business confidence survey, and the much anticipated interest rate decision at 14:30 AEDT.

Given the recent flurry of positive economic data, interest rate projections have been thrown off kilter, with traders now balancing leading economic indicators such as today's result with the RBA's stance, which have suggested in recent times interest rates are now back in the normal range. We also need to consider the minutes from the RBA's December meeting - although resembled the positive undertone of previous communiqué - the finer points indicated an attempt to pre-empt the curve, in effect providing some breathing space for the near term. Arguably, the conclusion of the minutes could be seen as precursor to the RBA stance on monetary policy when the bank reconvenes today with the final paragraph stating as materially shifting the stance of policy to a less accommodative setting and, therefore, as increasing the flexibility available to the Board at future meetings.  That being said, the market majority are factoring in an unprecedented fourth consecutive rate hike of 25 bps today.