Aussie on top as risk returns in spades.......>

FOREX: Aussie on top as risk returns in spades

-Following a firm Asia-Pac session, AUD/USD rallied further throughout the

European and US trading days having initially got a decent boost on firm retail

sales and China PMI numbers. AUD/USD looks to close comfortably above the $0.71

mark and at the week's best levels, but a break of the 100-dma at $0.7149 will

be needed before the near-term picture looks more positive.

-Global equity markets rallied from the off, with core European indices green

across the board and the Italian FTSE-MIB entering a bull market. The surge in

risk appetite dented bond prices and the JPY, which sits at the bottom of the

G10 table, alongside the USD, Wednesday.

-EMFX had a firm session as risk appetite returned, prompting TRY, BRL, ZAR and

INR among others to gain against the USD. Firmer EMFX dragged down short-end

vols for many high yielders. USD/TRY 1m vols, for example, fell 8 points.

-The Thursday calendar is quiet with much of the focus on Friday's US payrolls

figure. The RBI rate decision is due, alongside ECB minutes and speeches from

Fed's Mester & Harker.