After making significant headway throughout yesterdaysdomestic and in early European trade, the Australian dollar resumed itsdownward rout overnight with price action briefly crossing the downside of 98US cents earlier this morning, representing fresh 6-month lows. Risk currenciesin general remained defeated despite positive leads from European markets whichsaw the FTSE, DAX and CAC record solid gains. For European markets it remaineda ‘no news is good news’ environment with moderate optimism ahead of the EUSummit Wednesday. European leaders including new French President FrancoisHollande will attend an informal dinner with the primary agenda expected to becentered on ways to promote growth and employment in the region. It’s alsoexpected to see Hollande put forth the importance of implementing a Euro-bondwhich will yield little result.
U.S stocks erased earlier gains with continued uncertaintyacross the Atlantic the primary catalyst. A solid existing home sales reportprovided some earlier upside momentum, however European fears dominated by theclose with the DOW and S&P500 finishing largely flat on the day.
Meanwhile, consumer prices in the UK continued to moderateaccording to official inflation data released overnight with headline inflationslowing to an annual pace of 3 percent from a previous 3.5 percent while coreinflation slowed to 2.1 percent from a previous 2.5 percent. Sterlingoutperformed risk counterparts overnight and saw on moderate losses against thegreenback relative to the Euro and commodity units. After an early weekreprieve, the Euro pared gains overnight with EURUSD price action moving tolows of $US1.2657 and currently remains under pressure below $US1.27-figure.
With a reasonably light day in terms of local economic data,we anticipate the key directive for the local unit will remain regional equitymarkets with the Conference Board Leading Index the only low-tier themedomestically. Japan will also be a primary focus with the Bank of Japaninterest rate decision due today which has seen broad based Yen weakness in thelead up, with some corners of the market anticipating further easingmeasures.