In the absence of economic data, renewed optimism saw the US dollar pare gains overnight. Global equity markets were able to squeeze out moderate gains despite the Greece Saga continuing to resonate through the markets. The primary driver of US dollar weakness was north bound US equities which were given a leg up following the House of Representatives' vote to approve health care reform.
Greece’s economic struggle’s also remained in focus taking some of the steam out of positive feedback from the states. With the Greek economy in some 54 Billion Euro’s in the hole, the austerity measures set up to resuscitate the economy proving to be less than convincing, the more likely European Union assistance is needed. Up to this point Germany has been the primary stumbling block with Europe’s largest economy seemingly reluctant to participate in the rescue. Late last week, European Commission President Jose Manuel Barroso stressed the importance of a European bailout. Barroso urged EU leaders to agree on coordinated bilateral loans in which Greece could get financial aid by the financially stable European nations. We expect the Greece’s economic woes to remain in the headlines until the two-day summit opening on Thursday in Brussels. Until then, the possibility of assistance from the International Monetary Fund remains a possibility, albeit a last resort.
Despite the cloud of Greece’s economic woes looming, a north bound US equity market provided support for the local unit. At the time of writing the Aussie dollar is buying close to day highs of 91.8 US cents. With no local economic data on the bill today, we can expect equity market movements to be the key barometer in domestic trade.