The Australian Dollar has opened nearly one US Cent higher this morning and is currently trading at USD 1.0840,
after a rise in commodity prices and gains in the US stock market.

Australia: Gold and silver prices rose for the third consecutive session, boosted by fighting in Libya, uncertainty about debt-laden Greece and the rising cost of oil and grain. Last night’s 2011/12 Federal Budget was a reasonably predictable one from the Government with Treasurer Swan selling it as tough.

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In reality it is seen at best as neutral, with the return tomodest surpluses from 2012/13 onwards surprising, given the nation is experiencing the strongest terms of trade in 140 years. Following on from this, the Reserve Bank’s strategy indicates a rate hike is close to certain, so our AUD seems destined to remain strong for the time being; especially given the continuing weakness of the USD.

Gold traded higher to US$1,518 per ounce while oil was up $1.37 to US$104 per barrel, “fuelled” by concerns over higher US consumption levels. We see the AUD supported today following the overnight gains and as the market awaits data releases out of China due around midday (AEST), including consumer prices (CPI), producer prices (PPI) and retail sales for April. The main piece of data is CPI, which is expected to be 5.2% for the month, and it is felt this level or higher
could raise the prospect we may see further Chinese tightening that may provide a touch of a dampener to the AUD.

Majors: Despite US shares pushing higher overnight after Microsoft's $US8.5 bn deal to buy Skype, the US Dollar remained weak and pushed lower against most currencies. The DJIA was up 75 pts to reach 12,760 at close. Microsoft announced it is buying Internet phone pioneer Skype from investor group Silver Lake, the Windows creator's largest-ever acquisition.
Meanwhile in Europe, concerns over Greece's massive debt continue, with the view that European authorities must do more to help the country, a year after it barely avoided bankruptcy with a bailout. S&P, which downgraded the long-term bonds to B from BB-, said Greece might eventually have to resort to a partial default, reneging on as much as 50 per cent of its debt. As a result, the agency said it could downgrade Greece again in coming months.

Economic Calendar
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US MBA Mortgage Applications 6 May

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