Leads from Friday's session are going to have a very limited impact on markets today as they don't capture the breakdown in US debt ceiling talks over the weekend. As it stands, the leaders worked tirelessly over the weekend to try and have some sort of solution in place before Asian markets reopened, however this hasn't proved possible.

S&P 500 futures are currently trading 1% lower and gold has surged to new record highs of US$1616/oz. The only thing you can be assured of over the coming hours and days is volatility as the political posturing continues in the US. We're still of the view that the 'too big to fail' attitude will mean the debt ceiling is raised, but its becoming more evident that it's going to take longer than expected and that one side is probably going to have to give up more ground than they had wanted.

In economic news, Australian PPI data is due at 11.30am and is expected to show a rise of 0.6%. Although this is frequently seen as lead indicator ahead of Wednesday's CPI print, the recent correlation has not actually been that close. So it will be interesting to see how much attention the market pays to it.

In currencies, the US dollar has opened the week lower against most of the majors to reflect the weekend debt ceiling developments. The AUD/USD is currently trading at 1.0830; although a weakening US dollar usually drives the Aussie higher, it will be a bit of a tug of war as risk appetite will also come under pressure. The EUR/USD was last at 1.4366, pretty much unchanged from where it closed on Friday.

Market

Price at 6:30am AEST

Change Since Australian Market Close

Percentage Change

AUD/USD

1.0835

-0.0008

-0.07%

ASX (cash)

4580

-35

-0.8%

US DOW (cash)

12552

-113

-1%

US S&P (cash)

1331

-14

-1%

UK FTSE (cash)

5936

-6

-0.10%

German DAX (cash)

7332

-14

-0.19%

Japan 225 (cash)

10145

8

0.08%

Rio Tinto Plc (London)

44.21

0.45

1.03%

BHP Billiton Plc (London)

23.73

0.13

0.55%

BHP Billiton Ltd. ADR (US) (AUD)

43.37

0.04

0.09%

US Light Crude Oil (Aug)

98.14

-1.76

-1.76%

Gold (spot)

1601.0

13.00

0.82%

Aluminium (London)

2590.00

50

1.97%

Copper (London)

9663.00

-12

-0.12%

Nickel (London)

23989.00

14

0.06%

Zinc (London)

2452.00

-43

-1.72%

RBA Cash Rate to be raised by 25bp (Aug) (%)

5.00

1

25.00%

IG Markets provides round-the-clock CFD trading on currencies, indices and commodities. The levels quoted in this email are the latest tradeable price for each market. The net change for each market is referenced from the corresponding tradeable level at yesterday's close of the ASX. These levels are specifically tailored for the Australian trader and take into account the 24hr nature of global markets.

Please contact IG Markets if you require market commentary or the latest dealing price.

(From Ben Potter, IG Markets Strategist)

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