Despite European debt concerns remaining at the forefront of investors’ minds the Euro was able to regain some composure against the greenback currently trading just shy of US$1.24Key commodities, metals and energies remained under pressure which kept the Aussie dollar in the doldrums falling to lows 86.85 US cents overnight, however the local unit was able to return from the lows coinciding with some mild strength from US equities which were able to close the session in the black.
However, Europe’s economic hardship remained in the spotlight, which is proving to cap potential upside on global indices as investors ponder the potential contagion to respective economies. Economic news from the States saw The New York Empire State Manufacturing Index failed to meet consensus estimates in May falling to an index level of 19.11 against the expected level of 30. This represents a drop of 12.75 points from April recording of 31.86.
Locally, the RBA minutes for the May meeting will be closely watched this morning as investors pre-empt the next possible move, however at this point after a decent round of monetary policy tightening, the common consensus and certainly our view is the RBA will take a sit on their hands approach in June. We also have the CBA/HIA Housing affordability index which will be closing watch for any signs of the recent run of interest rate hikes taking its toll on the housing market. At the time of writing the local unit is buying 87.65 US cents.