Risk aversion was once again the common theme across global markets overnight with investors choosing the perceived safety of the USD and Yen – Gold also remain supported trading just shy of US$1,180 a troy ounce.

We did however see positive US economic feedback with ADP employment data recording growth of 32,000 in April, higher than the 30,000 new jobs expected. The ADP employment indicator is seen as a precursor for Friday’s Non-farm Payrolls which are expected to show the US economy created 190,000 new jobs in April.

By default this left the Aussie in the doldrums with the local unit falling to lows of 90.2 US Cents before regaining some composure to current levels of 90.6 US cents. However the Kiwi was able to break to the trend against the Greenback after Reserve Bank of New Zealand Governor Alan Bollard signaled a new beginning for the economy with stimulus likely to be removed in the coming months in addition to a tightening of monetary policy. Employment data out this morning outstripped consensus recording 1 percent growth in the first quarter against the expected 0.2 percent. At the time of writing the Kiwi is buying 72.7 US cents.

Meanwhile the Euro continued its decent falling to fresh 14 month lows against the USD amid backlash from Greek citizens on the stringent austerity measure taken by the Greek government in order to bring the economy above water. Investors are also running scared as they ponder the potential risk of contagion with other European economies, namely Portugal and Spain which face more potential ratings agency downgrades. Euro-Zone retail Sales recorded no change March, to represent an annual contraction of 0.1 percent. This was better than the expected 0.6 percent due to a positive revision from the previous month.

Locally, we expect the Aussie dollar to be swayed by Retail Sales data due for release at 11.30am, which is expected to show 0.7 percent growth in March. Trade balance data also due for release this morning. However the result will have to be fairly spectacular to see a reasonable amount of upside on the local unit. Given retail sales rising in line with consensus we expect the local unit to remain supported, however equity markets direction is likely to be the primary driver which is shaping up to be another red day on the local bourse.