It appears even a glimpse of optimism from the Euro-region is enough to spur market participants back in the game with another solid performances across risk assets overnight. An Italian auction of 3 and 10yr bonds was however one point of contention for markets with yields remaining stubbornly above the 7 percent levels. A sale of 3-yr bonds fetched a yield of 7.89 percent - a far cry from the comparatively meager 4.93 percent last month. A newspaper article out of France was responsible for a period of Euro weakness after claiming ratings agency Standard and Poor's would place France on negative watch within days.
Nevertheless, Investors are holding onto anything which suggests European leaders are ready to take decisive action to halt the European debt crises in its tracks. The premise of greater participation from the European Central Bank has also provided the market inspiration with reports the central bank will take direction action by channeling funds to indebted nations through the International Monetary Fund, this avoids providing funding directly to countries in need which is violation of ECB regulation. Talks between Euro leaders also appear to be supportive with reports of greater fiscal unity between European nations also contributing to market buoyancy.
A stronger than expected consumer confidence reading kept U.S equities buoyant overnight with Novembers number surpassing expectations to record an index level of 56 against a previous 40.9 - analysts had anticipated a much lower reading of 44.
This recalibration across global markets has also promoted strength across risk currencies with the Aussie, Kiwi recording over 1 percent gains over the last 24-hours.
It is however important to understand net-short positioning across risk currencies natural promotes buoyancy in currency conditions - a factor which is keeping the Euro above water for now. With the market convincingly to the short side through the month of November, a shift in sentiment encourages a squeeze to the upside.
The Aussie dollar has made a break to the upside of greenback parity with price action moving to highs of 100.77 US cents. It's clear the local unit is very much at the mercy from factors abroad - hanging in the wind ready for the next headline to provide guidance. The local unit made a brief drop back through parity earlier coinciding with ratings agency Standard & Poor's downgrade of six of the largest US banks. Local economic releases today include new home sales for October at 1100 with private sector credit and private capital expenditure at 1130am AEDT. At the time of writing the Aussie dollar is buying 100.3 US cents.