Australia: The Australian Dollar continued to be sold off overnight on the back of a weaker EUR while equity markets had a mixed night. Yesterday locally saw the release of the Australian RBA Minutes from its May Board meeting. The minutes did signal that the RBA are looking at a pause on interest rate hikes at next month’s meeting as they said that monetary policy is well placed. They also continued to say that interest rates are at around average levels, which is another hint that they will pause next month. Another key point taken from the release of the RBA minutes was that the RBA is keeping an eye on the debt crisis in the euro-zone. The AUD was sold off heavily overnight following news that Germany was planning to put a ban on short selling of Government Bonds, CDS and 10 banks and insurance companies. While the details were unclear, market speculation ran wild in the US session pushing AUD/USD down to a low of 0.8610. On the cross rates, AUD/EUR is holding around the 0.7050 level, while AUD/GBP and AUD/JPY are trading at GBP0.6010 and JPY79.50 respectively.

Majors: The US Dollar had a positive session overnight against the major currencies with all eyes firmly focused on EUR/USD, which traded down to USD1.2165. Early in the European session news that Greece had received its first bailout payment sent equity markets higher in Europe, with the DAX finishing up 1.5% while the FTSE finished up 0.9%. As mentioned above, news of the German short selling ban sent markets in reverse, with the DOW, after being up about 100 points, ending the session down 114 points. On a positive front, US housing starts for April reported a rise of 5.8%, well above the average estimates of 3.8%, while better company reports from Hewlett-Packard and Wal-Mart showed some positive signs in the US economy.

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