Australia: The Australian Dollar has opened slightly lower this morning and is trading just above USD 0.9100.

Yesterday was a historic day in Australian politics, when a Labor minority government was formed, once the three remaining Independents announced their 2-1 decision in favour of the Gillard Government. The final count saw the minority Government formed with 76 seats to the Coalition's 74 seats.

Priorities stressed by the Independents centred around health and education for regional areas, the national broadband network and climate change and these areas are likely to be the main focus of fiscal policy in the next three years.

In amongst the political theatrics, the RBA announced "no change" to interest rates and left the Official Cash Rate at 4.50% and emphasised that uncertainties in the global economic outlook remain (particularly the US economy), while domestic conditions continue to be strong.

These two events did little to the AUD, which seems a tad rangebound in anad around current levels.

Overnight, the AUD gave up some ground as US equities slumped and concerns heightened about European debt (and some of their Banks) and the US economy.

The release of Australian Bureau of Statistics home loan data at 11.30am AEST should be relatively low key and we see the AUD being likely to be sold on any rallies for the moment.

Majors: The USD gained ground against the EUR overnight with EUR/USD sliding from 1.2900 to 1.2685 as risk aversion gained momentum following more concerns on the state of the European and US economies and the emergence of banking concerns in Europe.

Spot gold gained while crude oil tumbled and LME copper fell 1.0% to USD7,269 per tonne whilst other base metals were mixed.

A Wall Street Journal article raised concerns over the EU Bank stress test results and followed warnings from the German Banking Association early in the week that the 10 largest German Banks will need to raise EUR105bn of capital, due to the Basel Committees's 9% requirement of Tier 1 capital in new capital in new rules to be released Sunday.