Australia: The Australian dollar has opened weaker this morning trading at US$0.8850 following another risk aversion sell of in the markets. European equity markets started the sell down on the continued debt crisis concerns and it followed into the US session, despite positive US data releases. Base metals continue to trade lower as concerns about global growth will reduce the demand for industrial metals. Zinc fell 4.9%, while aluminium, lead and nickel fell 3.2%, 6.2% and 5.4% respectively. Gold continues to be the safe-haven star performer and currently trading at US$1,233 per ounce. On the cross-rates the AUD is holding on gains against the EUR and GBP mainly due to their weakness with the AUD/GBP trading at 0.6060 while the AUD/EUR is trading at 0.7150. The AUD has technical key support at US$0.8715. With RBA decisions under the moicroscope, debate on the Rudd Government’s proposed super profit tax heating up and the issues out of Europe, this is a critical time for hedging thoughts for mporters and exporters. After the one way traffic of the last 12 or so months, the risk appetite equation is proving to be very important but equally, very hard to read.

Majors: As mentioned above, equity markets were sold down on Friday night with the Dow ending the session 1.5% lower at 10,620, the S&P 500 down 1.9% at 1,136 and the Nasdaq down 2.0% at 2,347. Some positive news out of the US on Friday saw the release of the US Retail Sales for April, which reported a rise of 0.4% better than the expected rise of 0.2%. US Industrial Production for April saw a rise of 0.8% with manufacturing output climbed 1.0% for the second consecutive month. The US University of Michigan Consumer Confidence for May increased to 73.3, showing households are becoming more confident while US Business Inventories reported a rise of 0.4% for March, signs that companies are seeing more demand for goods. These positive data release out of the US continue a trend the US economy is turning around. US Treasury Secretary Timothy F Geithner said that “Europe has the capacity to manage through this and I think they will”. He said the US economy is getting stronger, we are seeing a lot of strength, improvement and confidence.

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