As European Debt fears subsided, global equity markets returned to strength overnight as investors to concentrate on improvements in the economy and strong corporate earnings. This translated to positive movements in US equities which saw the DOW and S&P rally 1.39 and 1.37 percent respectively. In Economic news the US trade deficit increased 2.5% in March, widening to $40.4 billion from a downwardly revised $39.4 billion the previous month.

Across the Atlantic, Euro-zone Gross domestic product grew 0.2 percent in the first quarter, against the expected 0.1 percent. This represents an annual growth rate of 0.5 percent. Industrial Production also rose slightly above estimates recording 1.3 percent growth in March representing annual growth of 6.9 percent. This failed to assist the Euro to maintain strength, with the ailing currency falling against the greenback to lows of US$1.2605 – At the time of writing the Euro is buying US$1.2631.

Gold has also been a standout performer with the precious metal rising to highs of US$1,248 a troy ounce late yesterday as investors seek an alternative to fiat currencies – induced by the events of Europe. Overnight Gold retraced around US$9 to current levels of US$1,139 an ounce as sovereign debt fears eased.

Locally, positive investor sentiment overnight kept the Aussie dollar buoyant with the local unit returning to 89.5 US cents after retreating to lows of 89 US cents overnight. We expect the Aussie to be directed by employment data due out this morning which is expected to show the Australian economy created 22,500 new jobs in April from a previous 19,600. RBA Assistant Governor Phillip Lowe will also address the Colonial Forum in Sydney.