Caution persisted in global market activity overnight, however the usual flight to the low yielding greenback was nowhere to be seen. US equities finished in the red as investors weighed mixed earnings with less than positive comments from a fed official not helping the cause. Fed president of St. Louis James Bullard stated “The U.S. is closer to a Japanese-style outcome today than at any time in recent history.” This of course refers to the long term deflationary state of the Japanese economy. Perhaps a good barometer of risk at the moment is Japanese Yen activity which continued to hold the upper hand against the US dollar. In times of adversity the Japanese Yen is seen as the ultimate currency safety-play. Recent times have seen Japanese officials warn against excessive strength of the Japanese Yen as an expensive Yen against major counterparts makes exports become less price-competitive against competing economies, thus hampering an export fuelled recovery.

Euro activity also remained the preferred option against the greenback briefly breaking 1.31 the figure. Stronger economic confidence data and a decline of unemployment in Germany helped the Euro remain well supported. At the time of writing the Euro is buying around the short term support levels of 1.3070.

Following on from a strong day domestically, the Aussie remained well supported rising to overnight highs of 90.4 US cents. We also have some rumors around the traps that the Aussie could become the beneficiary of some month-end portfolio rebalancing.

Barring an good day across local and Asian equities, the Aussie appears to be under pressure around these levels is struggling to hold on to short term support around 90 US cents. Local economic news today includes private sector credit for June which is expected to show private sector borrowing increased to 3.1 percent annually from a previous 2.7 percent. At the time of writing the Aussie is buying 89.9 US cents.