Australia: The AUD is slightly weaker this morning after weakness in the EUR reduced risk appetite with some negative news out of the region. Negative snippets out of Europe, including reports from the ECB regarding the EUR and also their overnight deposit facility, along with the negative Retail Sales data lead the downward momentum during the offshore session. Positive trade data released locally during yesterday’s session and gain on the local equity market saw the AUD push through USD0.8500, but this morning it is trading closer to USD0.8400. The local stock market yesterday followed the lead from the US on Wednesday night and posted gains over 2%; up 104 points to 4486. Trade data that was released yesterday showed that Australia had its first trade surplus is 13 months. The balance of goods and services was a surplus of AUD134mio in April, which is quite a jump from the AUD2.04bio deficit posted in March. An increase in the prices being paid for exports is a large cause for the jump. It is likely that the AUD will remain in a fairly tight trading range today before the release of US employment data due out tonight with the expectation that the data will be strong.
Majors: As mentioned above, weakness in the EUR was partially to blame for the profit taking seen overnight. The EUR/USD traded near its 4 year low of $1.2112 that was reached last week. This morning we have seen the currency stable somewhat to be currently trading around $1.2170. A report released last night showed that the Euro-zone banks have placed a record amount of cash in the ECB’s overnight deposit facility which indicates that there is continued tension between the banks. There were also reports that the ECB would stop intervening in the level of the EUR. Retail Sales figures for the area in April was also negative falling by 1.5% compared to market expectations of a 0.1% fall. The rising unemployment and the recent concerns regarding the economic growth prospects in the region has prompted households to curb their spending. Out of the US overnight saw the release of Factory New Orders for April, which rose for an eighth consecutive month by 1.2%. This was below market expectations of an increase to 1.8% but shows positive signs for the manufacturing sector.