Australia: The Australian dollar has opened lower this morning as investors moved away from risk assets, leading to falls in equities and commodity prices. Yesterday saw the release of a better than expected employment report here in Australia. The report showed that Australian employment increased a further 33.7k in April (consensus was for an increase of 20k), beating expectations for seven of the past eight months. The AUD rallied on back of the report, breaking back through USD0.9000 by the close of the local session. However overnight we saw risk sentiment deteriorate once again with investors concerned over the economic growth outlook of Europe and the UK. Also hurting sentiment was news in the US that more banks have been included into a major investigation as to whether or not they misled investors about their roles in mortgage-bond deals. Equities came off following the news, placing further pressure on the AUD. On the day we have no major data being release so direction is likely to come from local and Asian equities. Recent ranges of USD0.8920 and USD0.9020 are expected to hold up as the market waits for any fresh news on the outlook in Europe.

Majors: The USD advanced against the EUR and the GBP overnight as investors worried about the ability of both zones getting their fiscal deficits under control. The EUR slipped to a 14-month low versus the USD as worries once again surfaced about the drag that plans to slash government spending will place on economies of euro-zone countries such as Greece, Spain and Portugal. Outside of Europe, the UK also faces painful measures to reduce its deficit as well as some scepticism about the new Conservative/Liberal Democrat coalition government’s resolve to adopt those measures. The GBP slumped on concerns to below GBP1.4600 from above GBP1.4900. It looks as though Europe and its ability to help Greece out of the current crisis is going to continue to dominate markets for the time being with the latest rescue package only offering temporary relief in investors minds.