Currencies and equity markets told a decidedly different story overnightwith strength from European and U.S stocks unable to provide sustained supportacross risk currencies. For every positive thematic in the market, there'sequal and opposite negativity holding back a sustained rally and although we'veseen positive movements across European and U.S indices, risk currencies remaincapped under the weight of Euro-region uncertainty.
The Australian dollar found intermittent periods of support overnight butselling pressure ahead of 99 US cents capped gains alongside the Euro with the EURUSD pair making a break to the downside of $US1.25-figure to fresh 23-month lows of $US1.2460.
Further weakness from the Euro coincided with a downgrade from ratings agencyEgan-Jones which cut its rating for Spanish debt in Junk territory. Although asmaller firm then the three most watch ratings agencies, market participantsconsidered it a pre-cursor to what we may see from the big three, S&P, Fitch and Moody's.
European indices recorded strong gains with the CAD and DAX both rising over1 percent, while the FTSE trailed behind with pressures from southern Europethe primary stumbling block. German consumer prices grew at an annual pace of2.1 percent in May according to official data released overnight, falling shortof economists estimates and the previous reading of 2.1 percent.
Optimism surrounding Greek polls which signalled pro-bailout parities aregaining support underpinned gains across the Atlantic with U.S equities findingform. The S&P500 and DOW which both recordedover 1 percent gains.
The highlight of the local day will be the release of retailsales data which is expected to see sales grow 0.2 percent in April down from0.9 percent growth in March. Also on the docket is the construction work gauge- both are due for release at 11.30 AEST. At thetime of writing the Australian dollar is buying 98.5 US cents.