European markets kicked off proceedings overnight rallying on the back of upbeat manufacturing data and an improvement in consumer confidence. Frances CAC index surged 3 percent and the DAX ramped up 2.53 percent ahead of banking stress test to be released tonight. With the strong lead from Europe in tow, U.S stocks and commodities surged as investors concentrated on better-than-expected earnings with the DOW and S&P increasing 2.0 and 2.25 percent respectively.

US existing home sales surpassed estimates to record a 5.1 percent drop in May instead of the 9.9 percent drop expected. Mixed news on the Jobs front with the number of US citizens applying for unemployment benefits for the week ending July 17 rose to 464,000 from a previous 427,000. Economists had expected a fall to 445,000. Continuing claims which includes citizens receiving unemployment benefits for a week or more fell to 4,487,000 from 4,710,000 in the previous week.

Given the resumption of market confidence, the greenbacks appeal was nowhere to be seen with the making significant south bound movements against major counterparts. With sentiment high and significant strength in global stocks and commodities, there was only one direction for the Aussie to head. The local unit surged through two big figures to highs of 89.5 US cents. At the time of writing the Aussie is buying 89.34 US cents.

Today, we expect the local unit to be reactive to local import and export data to be released at 11.30 this morning. However its equities that will be a key barometer and a good performance locally should at the very least keep the Aussie well supported, although with little in the way of market moving catalysts in the domestic session - the 90 US cent mark is likely to provide plenty of resistance.

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