Australia: The AUD continues to trade in a volatile manner while remaining contained within the range between USD0.8250-USD0.8450. This morning we are sitting at the upper end of this recent trading band with the AUD finding some support from the stronger performance on US equity markets overnight. It’s widely expected that the Australian equity market will follow the US markets lead and put in a solid performance today. This should ensure that the AUD retains a relatively bid tone throughout the local session. The release of Australia’s trade balance data for April is not expected to have too much of an effect on the AUD with the market forecasting a deficit of approx. $A800mio. Jul-10
Majors: It’s been a mixed night for financial markets, with positive data releases out of the US and further bad news out of Europe. In the US, the National Association of Realtors released a report showing that contracts on existing homes rose by a larger than expected 6.0 percent in April. This most recent positive release continues the recent positive run of data releases in the US and supports the view that the US economy is beginning to show some rela signs of recovery. In contrast to the improving outlook in the US, the Euro zone continues to struggle under the weight of its debt problems. The focus is now very much on Spain, and following last week’s debt downgrade, Spain’s borrowing costs continue to push higher. As a result the EUR remains under pressure, continuing to hover close to four-year lows against the USD. The European debt problems are expected to be the main topic of conversation at this weeks’ G20 summit.