Australia: As the market expected, the Greek Prime Minister survived a confidence vote, which will allow him to push through the austerity package he has agreed with Euro-zone officials to ensure that Greece gets the next tranche of loan money.

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Yesterday, during our local session, the RBA minutes from the June board meeting were released, with the RBA implying that while rates would need to be raised at some point there was no urgency. The minutes also noted that while the mining industry was performing well other areas in the economy were seeing weaker conditions with asset prices falling and increased downside risks to global growth as sovereign debt issues in Europe continue to weigh on markets. These comments saw the AUD fall sharply from USD1.0610 to USD1.0530 as traders cut long positions.

Base metals improved overnight on investor confidence with copper up 0.8% and nickel up 1.1%. Gold rose 0.3% to be trading at US$1,546.00 per ounce with oil also firmer at US$94.17 a barrel. Today we have the release of the Westpac leading index for April, which is unlikely to move the market, with the AUD expected to take most of its direction from developments in Asia.

Majors: US markets followed on from Europe’s lead overnight with the Dow closing up 0.9%, the S&P up 1.3% and the Nasdaq up 2.2%. On the data front, US existing home sales reported a fall of 3.8% for the month of May following the 1.8% increase in April.

In Germany overnight the German ZEW Economic Sentiment Index for June came in –9, below forecasts of –5, as recent European debt concerns have weighed on confidence and spending. Tonight in the US the market will be closely watching for the release of the FOMC rate decision and accompanying statement to provide a timeline around the Fed’s exist strategy from its QE2. The market has been pricing in that the US will start to raise rates in 2012.
Economic Calendar
AUS Current Account Balance Q1
AUS Westpac Leading Index Apr
US FOMC Rate Decision

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