Australia: The Australian Dollar has opened lower this morning, continuing on from yesterday’s weakness, which saw the AUD trade below 0.8400. The Reserve Bank of Australia’s interest rate announcement yesterday, to keep rates on hold at 4.50%, was broadly anticipated. Comments from the accompanying statement quoted “the Board views this setting of monetary policy as appropriate for the near term”. The comments noted inflation seems likely to be in the upper half of the target zone over the next year and high level of the terms of trade are expected to add to incomes and demand. With output growth likely to be about trend, interest rates are appropriate going forward as they are sitting near their average levels of the past decade, which is a significant adjustment from the very expansionary settings reached a year ago. Australian Retail sales data for April was better than expected, whilst building approvals for April fell 14.8% for the month, reversing the strong gain of 16.8% in March. Base metals were weaker overnight on concerns that demand will slow, while gold edged higher to be trading at US$1225.70 per ounce. Locally today we see the release of Australian GDP for the March quarter, with the market forecasting a rise of 0.4% for Q1. Expectations are for the AUD to trade in a relatively tight range in the local session.

Majors: The US Dollar rose overnight as global growth concerns weighed on the markets again despite some positive data releases. Equity markets ended the session lower with the Dow down 1.1%, the S&P 500 down 1.7% and the Nasdaq down 1.5%. Oil stocks were hit hard overnight with BP falling 15% after the company said that its “top kill” strategy to stop the oil leak in the Gulf of Mexico failed. US construction spending rose 2.7% in April, the highest monthly growth since August 2000, while the US ISM Manufacturing Survey fell to 59.7 in May from 60.4 in April. Tonight in the US will see the release of pending home sales data and the weekly mortgage applications data.