Asia Pacific share markets are set for modest opening gains after a weaker USD spurred yet another record high in the S&P500 index. However currency markets may grab the spotlight. A strengthening GBP drove most of the dollar weakness as the EUR and JPY continued to recede from recent highs. Today’s fix of the CNY will likely draw additional attention.

Commodity markets sent mixed signals. Copper and iron ore moved lower again, continuing a correction of recent strength. The moves were not consistent across industrial commodities, with oil firming and gasoline rocketing higher. However pressure on gold and bond markets indicate increasing risk appetites.

The Bank of England surprised investors with comments last week that it expected to raise interest rates this year if inflation continues to rise. The subsequent strength in the pound puts it on traders’ centre screens. This complicates the USD picture. After hitting a low point against the CNY below 6.44 two weeks ago it is now sitting above 6.55. A fix above or below last Friday’s could set direction for currency markets.

A break out of the narrow four month trading range by the Australian share market is unlikely today. Futures show a sixteen point gain, but the mixed commodity signals and the currency focus mean a negative close to the session is possible. Volumes across the region may be subdued ahead of Thursday’s all important US Federal Reserve Board meeting.