After starting the week in a decidedly vulnerable position, the Australian dollar found mild support overnight after earlier yesterday falling to fresh 2012 lows of 101.09 US cents. Better than expected local retail sales data provided a small inflection point with relative calm from the Euro-zone and moderate support for US equities carrying the local unit to highs of 102.2 US cents.

Meanwhile, the growth vs. austerity debate continues to run hot in Europe with concerns over how French President-elect Francois Hollande's pro growth agenda may affect Franco-German relations with political faction in Greece also remaining a prime concern. In an act of defiance over what many consider draconian austerity measures, Greek voters are throwing their support behind anti-austerity/bailout political parties thereby increasing the risk of disorderly default and subsequent Euro-zone exit. Without a coalition government, the writing appears to be on the wall for Greece - the voters have spoken and the lack of cohesive action by political parties will see bailout terms breached in-turn increasing the likelihood of a return to an independent currency. The Euro continued to suffer under the weight of political uncertainty with moderate losses recorded major counterparts with exception to the EURCHF pair which is sticking like glue to the 1.20 threshold set by the SNB. 

On the local docket this morning we have the release of trade balance numbers for March which is expected to see the deficit widen to AUD1.4 billion. The Federal Government will also hand down its annual budget this evening. At the time of writing the Australian dollar is buying 102.1 US cents.