In typical fashion we have become accustomed to US equities remained under pressure as investors considered the potential fallout from the European debt debacle. BP’s oil spill in the Gulf of Mexico also weighed on consumer sentiment as the Obama administration instructed the FBI to launch criminal investigation. Better than expected economic feedback also failed to negate this sentiment with the Dow and S&P lost 1.11 percent and 1.7 percent respectively. The ISM Manufacturing Index declined to 59.7 in May against a previous 60.4. Analysts had expected a greater fall to 59. A result above 50 indicates and expansion. Construction spending surpassed estimates to record 2.7 percent growth in April against the expected flat result.

The Euro touched fresh four year lows overnight of US$1.2110 however manage to squeeze out some mild support to currency levels of US$1.2230

Gold remained the go-to currency overnight which the metal rising to highs of US$1,229 a troy ounce. At the moment it’s hard not to find a reason to have a Gold exposure. We have the constant threat of the southern European nations on the brink of default, forcing the safety play and this is whilst investors are concerned about the European contagion having a deflationary effect on economies.

The last 24 hours has seen the Aussie dollar also retrace from the high US$84’s to current levels of 83.3 US cents. Yesterday The Australian Dollar has been led lower today as strength in retail Sales data failed to counteract yesterday morning’s less than convincing building approval numbers data. Building approvals contracted 14.8 percent in April against the expected contraction of 5 percent.

As anticipated, the Reserve Bank of Australia also kept benchmark interest rates on hold at 4.5 percent. In a statement Reserve Bank Governor Glenn Stevens cited concerns about European economic hardships a primary consideration for the decision. It’s now clear the RBA will now take a re-active approach as they gauge the potential fallout from sovereign debt concerns from Europe.

Economic news today includes Gross domestic product which is expected to grow 0.5 percent in the first quarter against a previous 0.9 percent – The Australian economy is expected to grow at an annual rate of 2.4 percent. Not a lot of upside to be gathered in the event of an ‘on–target’ reading – however anything less than the expected is likely weight on local equities/currency.