The economic health of the Euro-region remained a stumbling block despite well-attended debt Auctions from Spain and France. Widening yields spreads between peripheral nations and the perceived safety of German debt remains the common theme with rising Italian and Spanish yields signaling a further breakdown in confidence in the region. Conjecture over a near-term downgrade of France compounded existing fears of the systemic flow-on from peripheral nations to the heart of the Euro-zone.
The Australian dollar remained under mild pressure throughout the session but support above 103 US cent contained the selling to settle in to a 50 pip range throughout US trade. Barring a significant deterioration in sentiment across regional equity markets, we anticipate this narrow range between 103 and 103.5 US cents to hold up throughout domestic trade. The local day ahead will see the release of 1Q import and export price indices at 11.30 AEST.