Australia: The AUD has finished marginally lower as the currency followed the movements of US equity markets during the offshore session. The DOW finished 0.1% at 10139 after a sell off in energy stocks offset the personal spending data which was better than expected. With a lack of influential economic information not due for release until later on in the week we have seen and expect the AUD to continue in a tight trading range. Many local investors are awaiting news regarding the Resource Super Profit Tax currently consuming the mining sector. The new Prime Minister, Julia Gillard is very keen to see a quick resolution to the dispute which indicates that we could have news about a revised package this week. Should the government back down and amend the tax considerably, in favour of the mining companies, then we could see the AUD strengthen. Investors are also looking towards the US June payroll data due out on Friday night, after the Fed’s comments last week in its interest rate announcement signaled that their economic recovery could still face some hurdles.
Majors: Despite the agreement over the weekend at the G20 summit that the counties would commit to at least halving their fiscal deficits by 2013 and stabilizing debt to GDP ratios by 2016, the EUR/USD has been unable to stabilize above USD1.2300. This is likely to be due to the fact that European countries will need to be more aggressive in their attempt to meet the agreement which could impact the economic recovery for the region. On the back of the weaker EUR/USD we have seen the EUR/AUD trade comfortably above USD0.7100 during the offshore session, despite pulling back this morning as the AUD weakened. As mentioned above, US Personal Spending for May rose more than expected to 0.2% compared to market expectations of 0.1%. This can be attributed to the increased incomes which are resulting in increased spending.