Markets regained some ground in US trade with event risk ramping up as we approach the business end of the week. Sentiment had remained subdued in European trade with the key issues being Portugal's political issues, Greece's bailout drama and a level of cautiousness ahead of the ECB. In US trade, sentiment picked up on the back of a much better than expected ADP non-farm employment change print. The reading showed 188,000 jobs were created versus estimates of around 161,000. Unemployment claims were only slightly better than expected while the US ISM services PMI and trade balance disappointed.

While US equities pushed higher, the US dollar actually struggled a bit and lost ground to most major currencies apart from the AUD. AUD/USD dropped to a low of 0.9037 and continues to struggle as the swaps market prices in a higher probability of an August rate cut following Governor Glen Stevens comments. The pair has recovered to 0.9088 early in Asia but is likely to endure further volatility with another round of local economic releases on the cards. We have building approvals at 11.30am where a 0.9% contraction is expected while RBA Deputy Governor Lowe will be on the wires. Although Lowe's speech is mainly on regulation, it'll be interesting to see if he goes through his speech without mention of the currency. Selling into strength is likely to be the preferred strategy.

Japan is in for another big day. USD/JPY dropped back below 100 yesterday but has since bounced back ahead of BoJ Gov Haruhiko Kuroda's speech. Traders generally don't like being caught out short on USD/JPY when Japanese officials are set to speak. Weekly fund flows data is also due out of Japan today and this could influence how the yen and Nikkei trade. We are currently calling the Nikkei relatively flat at the open.

Ahead of the open we are calling the Aussie market up 0.5% at 4766. We expect to see a mild recovery in the resource names to start off the session and gauging by the ups and downs we've seen this week, we wouldn't be surprised to see markets take off and recuperate a chunk of yesterday's losses. BHP's ADR is pointing to a 0.4% gain at the open to 31.17 after iron ore climbed 1% to 120.5. Gold bounced 0.7% as the USD lost some ground and this might support the gold names today. The conclusion of the Egypt situation might see oil prices cool in the short term and this might have some bearing on the energy names. Crown and Echo will be in focus today with a NSW government ruling due out. Building approvals data will put the likes of James Hardie, Boral, ABC and CSR.

Market

Price at 6:00am AEST

Change Since Australian Market Close

Percentage Change

AUD/USD

0.9075

0.0004

0.04%

USD/JPY

99.8700

-0.8400

-0.83%

ASX (cash)

4766

21

0.45%

US DOW (cash)

15000

99

0.66%

US S&P (cash)

1613.9

6.9

0.43%

UK FTSE (cash)

6246

-5

-0.08%

German DAX (cash)

7849

-6

-0.07%

Japan 225 (cash)

14042

-13

-0.09%

Rio Tinto Plc (London)

26.88

-0.06

-0.22%

BHP Billiton Plc (London)

17.15

0.04

0.23%

BHP Billiton Ltd. ADR (US) (AUD)

31.17

0.12

0.40%

US Light Crude Oil (June)

101.22

-0.28

-0.28%

Gold (spot)

1253.55

9.1

0.73%

Aluminium (London)

1810

-22

-1.22%

Copper (London)

6994

14

0.19%

Nickel (London)

13874

-126

-0.90%

Zinc (London)

1875

-17

-0.89%

Iron Ore

120.5

1.2

1.01%

IG 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.

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