Australia: The Australian dollar found some support from the release of strong Chinese trade data yesterday. The unofficial report served to support the view that the Chinese economy is still performing very strongly, in contrast to the current situation in Europe. Further encouraging news out of the US is also adding to the positive tone and increasing investor risk appetite. At this stage it is too early to call for a significant bounce in the AUD as the ongoing problems in Europe are still evident and further bad news from that region could cause the AUD to break back down through the key support area around USD0.8060 – 0.8080. Earlier this morning the Reserve Bank of New Zealand increased their official cash rate by 25bps to 2.75%. The RBNZ Governor Alan Bollard said “ underlying inflationary pressures are expected to increase… is therefore appropriate to gradually remove policy stimulus”. In Australia today we have the release of labour force data for May, with employment expected to increase by approximately 20,000.

Majors: Overnight US Federal Reserve Chairman Ben Bernanke was doing his best to provide some soothing comments for global financial markets. In his testimony before the US congress Bernanke said that the impact of the European debt crisis on US growth is “likely to be modest” and he also stated that the Federal Reserve is ready to “take the actions necessary to ensure stability and continued economic recovery”. The Fed’s Beige Book business survey showed that the US economy strengthened across all 12 of the central bank’s regions in the months of April and May. However the growth was modest and US interest rates are likely to remain at record low levels for the foreseeable future. Most economists predict the Fed will wait until at least 2011 before beginning to raise rates. Most of the major currencies were largely unchanged overnight while in commodity markets, gold fell marginally while crude oil rose by 2.7%.