Australia: Overnight we saw risk appetite return to the markets after some positive earning results, positive data releases and reports that the bailout agreement for Greece is very close. Equity markets in the US rallied after better than expected earnings results from Motorola and Starwood Hotel's and Resorts. These results, as well as the decline in Initial Jobless Claims saw the DOW rise 1.1%, the S&P500 up 1.3% and the Nasdaq gaining 1.6%. As mentioned above the Initial Jobless Claims dropped by 11k to 448k which is a one-month low as companies cut fewer jobs. This supports the comments made by the US central bank yesterday in the accompanying statement to the interest rate decision, which stated that the labour market is beginning to improve. These results as well as stronger commodity prices have helped the AUD strengthen during the offshore market.

Today sees the release of local New Homes Sales and also Private Sector Credit both for the month of March. It is not expected that these releases will have too much of an affect on the market as investors wait until Tuesday's RBA board meeting on interest rates. Despite initial thoughts earlier in the month that the RBA may hold off on raising interest rates in May, the last couple of days have seen the markets increase the likelihood that they will increase interest rates by 0.25% to over 50%.

Majors: With the recent downgrades in the European countries and the continuing hurdles in approval for the Greece rescue package, officials overnight attempted to restore confidence in the markets by commenting that they are close to reaching an agreement. The parties involved in the bailout, including the International Monetary Fund (IMF), European Central Bank (ECB) and the European Union (EU) have spent the last few days trying to reach an agreement, with it expected to be reached over the weekend. The comments as well as positive economic data for the region have seen the EUR/USD strengthen and open stronger this morning at USD1.3225. Data released in the region overnight saw Economic Sentiment for April improve by more than the markets were expecting. The index increased to 100.6 compared to the expectations of an increase to 99.4. This surprised the market as the increase in economic sentiment conflicts with the recent sovereign debt issues and downgrades currently plaguing Europe.

Australia International Monetary Fund