Australia: The AUD bounced from its support levels yesterday, off USD1.0480, after the local equity market fall was limited, with investors seen barging hunting following the recent few days falls.

Base metals were also higher overnight with copper up 0.8%, aluminium up 1.0% nickel up 2.2%, lead up 1.6% and zinc up 3.4%. Gold traded to a 3 week high of $US 1,526.60 on safe haven buying, up 0.6% on the day.

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Oil traded higher, breaking back above US$100.00 a barrel at one stage, however it finished slightly lower at US$99.59. Today locally we have the release of the construction work done for Q1 with this unlikely to weigh on the AUD. We expect the AUD to be directed by offshore moves today with an indicative range of USD1.0500- 1.0600.

Majors: European sovereign debt concerns continue to weigh on markets, as Greece's issues in particular still cause markets to jump at any news or rumours.

ECB policymaker, Christian Noyer, said overnight that a "restructuring of Greece's debt is a horror scenario. Greece must apply its EU-IMF programme entirely and completely.

There is no alternative". Positive data out of Germany overnight helped ease some concerns about growth in the region, with German GDP up by 1.5% in Q1 to be +5.2% year on year. In the US overnight, new home sales reported a rise of 7.3% in April to a 323k annual pace, up from 310k in March.

Also overnight, the release of the US Richmond Fed manufacturing index, which fell to -6 in May, was slightly lower than expected though in line with last weeks Philly Fed survey.

Some Federal Reserve members were speaking overnight, with St Louis Fed President Bullard saying "prolonged financial market turmoil could be a negative for the US".

While Fed Governor Duke highlighted the negative impact of high oil prices on the US economy in his speech.

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