Australia: The Australian dollar appears to be finding some support around the USD0.8600 level as investor concerns over the European debt crisis ease a little. The AUD has managed to climb over 2% this month and may be able to gain further ground if market attention moves back to domestic issues. There still exists potential for the Reserve Bank of Australia to hike official interest rates further this year, and should international markets begin to calm a little, investor interest in the carry trade may begin to re-emerge. Other commodity currencies, such as the CAD and NZD, face a similar outlook. With no local data due for release today, expectations are for a relatively quiet local session.

Majors: The main focus for markets overnight was the release of US Housing data for the month of May. Housing starts fell to 593k, lower than market expectations for a figure closer to 650k. The 10% contraction from the previous month is mainly attributed to the end of the government funded home-buyer tax credit scheme. Such a result is concerning for the market as it may be a sign that the US housing market will continue to struggle without ongoing government support. The USD found some initial support early in the offshore session as reports began to emerge that Spain may seek financial aid. These reports were later dismissed by Spain, the European Commission and the IMF, sparking a small rebound in the EUR. The Bank of Spain announced plans to release the results of recent stress tests that have been carried out on the nations lenders. The release is aimed at calming fears that the Spanish banking system is compromised by recent sovereign debt issues

Australia