Australia: After a brief rally yesterday, the AUD has fallen back through USD0.8700 as risk aversion trading was back in play. Yesterday the AUD initially rallied towards USD0.8770 after it was announced that Julia Gillard had became the country’s first female prime minister. The rally was brief however and the AUD settled back towards USD0.8730 as the excitement wore off and investors contemplated what this would mean for the controversial mining “super profits” tax. Overnight the AUD lost further ground as investors back away from US equity markets as a result of some disappointing earnings and uncertainty over the shape of the financial overhaul reform in the US. With not much in the way of domestic data being released today, the AUD is expected to trade within the overnight range potentially testing lower levels if equities follow on from last nights declines . Majors: The USD weakened versus the EUR and the JPY Thursday night but gained ground against the growth currencies as the Federal Reserve’s subdued statement on the economic outlook kept demand for risk in check. The USD had been supported by expectations the US recovery would outpace those in Europe and Japan, however the statement called that into question. Disappointing earnings reports in the consumer-discretionary sector also rattled the markets, the Dow Jones Industrial Average dropping 1.41% by the close. Investors are still very nervous and cautious about the global economic outlook and this is producing a very choppy market. With signs this is likely to continue, we can expect much of the same in the coming weeks, months. Upcoming data in the US tonight includes; personal consumption for Q1, consumer confidence for June and GDP q/q (annualised Q1).

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