Big fireworks in the currency markets!

This may be a holiday week here in the U.S. But the market action in the currencies is anything BUT boring. A quick run-down ...

* The Reserve Bank of Australia did NOT raise interest rates this week, choosing instead to wait until after a key inflation report due out on April 24, according to observers. But you know what? That only managed to tank the Australian dollar for a couple of hours. Before long, the Aussie dollar reversed sharply and surged to a new high. If it clears a December 1996 high of 82.1 U.S. cents, it'll be at the highest level in almost 17 years.

* The Bank of England did NOT raise interest rates, either. Instead, it kept them at 5.25%. That caused the pound to dip sharply ... but now, it's trying to rally back. By far the biggest news is that ...

* The euro is breaking out big-time. It was recently up sharply to 1.3428 against the dollar, the highest since March 2005. If it clears that 1.3482 high, the only technical resistance left will be the all-time high of 1.3666 in December 2004.

* Lastly, the yen futures are holding that level I highlighted in this April 3 post.

Now, here's something we simply can't ignore -- the U.S. employment report for March is due out tomorrow. With the dollar getting its head handed to it, the U.S. Fed clearly on the sidelines, overseas economic growth still strong, and overseas central banks still on a tightening track (even if a couple of 'em opted to skip hiking this week), this report could be huge. A weak number could turn this technical breakout into an all-out rout, while a strong number could cause a nasty reversal. What I wouldn't give for a crystal ball!