Australia: The last 24 hours has seen the AUD hold a relatively tight trading range, with expectations that this will continue today until the RBA interest rate decision due to be released at 2:30pm (AEST).

The US markets were closed overnight for the Independence Day holiday therefore liquidity was thin and markets were unable to find much direction.

The AUD is slightly weaker this morning ahead of the RBA decision with investors expecting the RBA to announce that the cash rate will remain steady at 4.5%.

With continuing problems in Europe, growth downgrades and poor data releases in the US and continued inflation risks locally, it is expected that the RBA will wait another month and see how our economy is fairing.

All eyes will be on the accompanying statement as to the likely timeline of further interest rate increases.

Should the RBA statement read more optimistic than the markets are expecting then we could see the AUD move towards USD0.8500.

Majors: The US ended fairly unchanged against the major crosses due to the US holiday.

The USD gained modestly against the EUR and the GBP after it's sell off on Friday due to the poor employment data.

Due to the USD gain, the EUR has fallen from its Friday highs of EUR1.2600 indicating that investors are unsure whether that level is reflective of the current fragile state of the European economy.

Although with greater focus now on the data out of the US and their economic recovery it is possible that we will see the EUR/USD strengthen further towards EUR1.2800.

Overnight European Investor Confidence for July was released and came in better than expected at -1.3. Retail sales for May were slightly worse than expectations at 0.2% compared to expectations of 0.3%.

Consumer spending in Germany, France and Spain were the main contributors to sales in the region.

The big test for the EUR will be the publication of the European bank stress tests due out later this month, although many remain skeptical on how the stress tests compare to the realistic pressures that the banks could face.