Australia: It was another choppy session for the AUD overnight after the US central bank left its interest rates at historical lows and Standard and Poor lowered its long-term credit rating for Spain. After clawing back some of the previous nights losses early yesterday, the AUD was given a boost by slightly stronger than expected CPI numbers, which saw traders pricing in more of a chance of an RBA

interest rate hike next month. The US FOMC once again said that interest rates would remain low for an extended period to strengthen the economy. They also said that they were beginning to see an improvement in the labour market, while the housing sector had edged up. Wall Street recovered some of its losses on the back of the statement and this flowed into the currency markets. Standard and Poor's downgrade of Spain's debt, the third European nation in two days to have its rating lowered, did not have too much of an impact on the currencies with the AUD remaining above USD0.9230. AUD/EUR peaked overnight trading up to EUR0.7030, its highest level since the Eurozone

currency began trading on January 1, 1999. With no major economic data being released locally today, the AUD is expected to tread water between USD0.9200 and USD0.9300.

Majors: The EUR rebounded slightly as the Federal Reserve committed to keeping interest rates low, sparking a rally in riskier assets. The EUR had dropped to $1.3114 following S&P's announcement on Spain's downgrade of its long-term credit rating, saying that the country would grow more slowly than had been anticipated. However the release of the Fed's statement saw some recovery in investor risk appetite, leading to a slight recovery in the EUR. Uncertainty about the Greek debt crisis will continue

to weigh on the EUR with the likelihood of additional downgrades adding to the pressure. Tonight in Europe we have German unemployment data for April and the Business climate indicator also for the month of April.

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