After a period of relative strength from the Aussie dollar, the upside momentum seen throughout the domestic session stalled overnight with the AUDUSD pair unable to break the 99 US cent mark. The local unit led the risk currency charge higher overnight, but failed to build on earlier upside momentum. Nevertheless, it's been a solid start to the week across the risk spectrum driven by talk of a rescue fund for troubled Euro-region banks and encouraging option polls from Greece which suggest conservative parties will fare better at the next election. With U.S markets closed for Memorial Day, European markets set the trend but erased earlier gains by the close with key benchmark indices the CAC and DAX finishing 0.16 and 0.26 per cent lower while the FTSE managed to squeeze out a 0.1 per cent gain on the day.

The Euro's ascent has been moderate in comparison to its risk counterparts with the EURUSD pair running into resistance around $US1.2620 after the local close with the pair maintaining a downward trajectory in the ensuing period with supportive behaviour is noted around the $US1.2520/30 region. Meanwhile, Spanish bond yields continue to rise as the nation prepares to rescue its largest financial institution Bankia. The premise of Spain recapitalising the troubled bank with sovereign paper is attracting negative attention which has detracted from the other more positive themes across markets.

In the absence of any top-tier data in domestic trade, we anticipate regional equity movements to govern demand for risk currencies in the local session before we're once again at the mercy of feedback from abroad. With the greatly anticipated non-farm payrolls coming up on Friday, it would be also reasonable to expect the focus to switch to the United States in the next few days with a string of job related data due seen a precursor ahead of the main event. Also in focus this week will GDP and core consumer expenditure (Thursday) with ISM manufacturing gauge due on Friday.

Local economic data today includes HIA New home Sales at 11am AEST. At the time of writing the Australian dollar is buying 98.5 US cents.