Australia: The AUD has opened more than half a cent higher this morning after a firm night on US and European equity markets and also continued concerns about the European debt issues saw the demand for the AUD pick up. The AUD is currently trading around USD0.9930. With a lack of influential data due to be released this week and the lighter trading conditions as investors wind up before Christmas, we will see the local currency mainly influenced by offshore developments. Comments overnight regarding the state of the EUR and the countries that continue to struggle with sovereign debt problems saw the AUD/EUR rocket through EUR0.7500 to be currently trading above EUR0.7550, levels not seen for many years. Today sees the release of the RBA minutes from its December meeting where the RBA kept the cash rate steady at 4.75%. Investors will be looking at some hints as to when next year we could see further moves by the central bank in tightening monetary policy. At the moment, the market isn’t pricing in a move until Q3, 2011. While the release of the minutes may see some volatility during today’s session, it’s likely that again we’ll see a tight trading range for the AUD.

Majors: The EUR/USD dropped below USD1.3100 overnight as Moody made further downgrades to some Irish banks and also warned about a large contingent of Spanish banks that could also face downgrades and follow in Greece and Irelands footsteps. An OECD report released urged fiscal restraint in Spain, and while it’s in course to meet its Budget deficit target, there are some downside risks that do pose as a concern which could see further weakness in the EUR. The Euro-zone December consumer confidence results which were released overnight also influenced the weaker EUR as it came in at -11 compared to market expectations of a -9 result.

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