Australia: The AUD has opened at USD0.8100 after a tumultuous few days in the markets driven by fears (not concerns) about the European debt crisis spreading to more countries and slowing the recovery in the global economy. Our AUD has depreciated 4.50% since the end of last Thursday’s local session, and those with a technical leaning would note the view of many that should 0.8070 break, the path to 0.7700 would be the AUD’s next real support level. The falls in New York continued last night. Following Friday' session when the Dow closed down 3.15% and the broader-based S&P 500 index fell 3.44%, last night saw the Dow fall a further 1.16%, which is its lowest close since November 2009. Sovereign debt is the main topic now, seems a long time since the words “toxic assets” dominated proceedings (and writing this report)! Credit spreads are blowing out in Europe, including “strong” countries such as France, Belgium and Italy. The NAB monthly business survey for May is released today, and the market will study to see if last month’s lower readings in Business Confidence and Business Conditions are sustained or not. We see the AUD trading between 0.8090 and 0.8150 today, but as stated above, were AUD to close offshore below key support around 0.8070, it is “vulnerable”.

Majors: A mixed night for the US Dollar against the major currency pairs overnight. EUR/USD opens at 1.1915 after a choppy session overnight. GBP/USD strengthened to a high of 1.4563 overnight but later pared back gains to open at 1.4465. USD/JPY opens at 91.35. We think US Federal Reserve Bank of San Francisco President Janet Yellen sums it up well when she stated: “Although signs of recovery do abound, there are obviously significant headwinds to stability that remain…Those headwinds come from structural imbalances from financial sector weaknesses and uncertainties from unanticipated environmental and political events.” There are some serious issues at play in the world now, following the 2008 GFC and the response to it by Governments around the world. Crude oil fell on concerns that Europe’s debt crisis would spread in the euro zone. Spot gold rose as the European debt crisis boosted the appeal of the metal as an alternative holding currency. The metals tumbled, with copper down 2.9% on concerns that slow economic growth would curtail demand for the metal. We await another day!