Australia: The Australian Dollar did not revisit the sub 0.8100 territory on Friday’s trade as it did the previous day. Equity markets recovered on Friday from the heavy sell off the previous day but all the financial markets remain very fragile as concerns remain on the impact the sovereign debt ituation has on all financial markets. The AUD traded below 0.8220 and as high as0.8325 on Friday and has opened today just under 0.8300. Although equity markets were soothed somewhat by the passage through the German Parliament of their share in the bailout package for Greece it was a faint hearted one with all major European indices modestly down but the US market provided an uplift with the Dow up 1.2%, the S&P500 up 1.5% and the NASDAQ 1.1% as investors came back into the market on the premise Europe’s debt issues will not detour the economic recovery in the USA. In this environment gold should be rising but spot gold moved slightly lower to US$1,177 as the USD regained its strength in the short term as a safe haven from the turmoil on financial markets. Oil continued its downward trend as well touching US$70 a barrel. We expect the AUD to be volatile in the short term as the markets digests what the impacts of the austerity measures, which will be introduced into the Eurozone in the near future, have on the global economy.

Majors: On Friday data from Europe revealed that the Eurozone continues to grow very modestly with PMI indices indicating expansion in the manufacturing and service sectors. Germany’s Ifo survey for May was virtually unchanged from the previous month and the GDP for Q1 was left unrevised at 0.2%. The US Senate bill on financial regulation was passed on Friday which may see some sweeping changes on the way US banks and financial institutions are regulated but some say they may not be as severe as first thought. We expect the AUD cross rates to trade in a wide range as well against the EUR, GBP and JPY in the near future as all eyes continue to focus on Europe.