Australia: The AUD has opened lower this morning as news out of Europe regarding the financial stability of Spain caused investors to reduce their risky positions as fears about the likelihood global economic recovery persisted. With commodity prices flat during the offshore session, the AUD took its lead from the US equity markets, which were down as concerns over Europe’s debt crisis continued. The DOW and the S&P 500 were down 1.2% and 1.3% respectively. Yesterday during the local session saw the release of New Motor Vehicle sales for April which surged 8.4%, the biggest monthly increase in nearly a decade. These results show positive signs that the car industry is recovering with slow sales over the past 12 months. It is thought that this strength will continue with many businesses still taking advantage of tax breaks for businesses which will wind up in December. There is little data due to be released during our session today; therefore it’s likely that the AUD will remain in a small trading range until the offshore session when more information regarding Europe is released and digested by the market.

Majors: Spain’s economy is now under fire as the Bank of Spain removed the managers of CajaSur, a regional savings bank after it was placed in administration due to defaults on its property loans. The bank is only small, but accounts for nearly 0.6% of the assets of the country’s financial system. Spain’s central bank released a statement that the failure won’t affect the banking system as a whole, but this didn’t help the sentiment in the market. The Spanish Government has also introduced some new measures to reduce the current public deficit which sat at 11.2% of GDP last year, in a hope to bring it within the Euro-zone limit of 3%. The UK Government also announced measures to reduce its own budget deficit which is currently at 11% of GDP, with spending cuts totaling GBP6bio. This influenced the GBP/USD with it trading lower during the session before strengthening to USD1.4400. Data released out of the US overnight included Existing Home Sales for April which rose to a 5-month high of 5.77mio which is an increase of 7.6% compared to market expectations of an increase of 5.1%. This increase in purchases is due to buyers taking advantage of the government tax credit that expires in June.