Despite solid gains from European indices and mild support for U.S stocks, the overall theme of negativity continued to hold risk assets at bay overnight with intermittent periods of strength quickly overcome, with European drama's remaining the key directive.
An investor reads a newspaper with a magnifying glass in front of an electronic board showing stock information at a brokerage house in Huaibei, Anhui province April 5, 2012.
The Australian dollar has overall outperformed its major counterparts and found moderate support against the greenback rising to highs of 98.14 US cents before coat-tailing the Euro lower in the latter part of trade. After falling to fresh 22-month lows the Euro regained some composure throughout the session, but any upside was quickly met with resistance with the pair stabilizing around current levels of $US1.2540.
'All taste and no nourishment' remained the general consensus after the Euro-leaders dinner meeting in Brussels which yielded little in the way specifics or conclusive way forward. Any sign of solidarity or a unified front from Euro leaders is proving to have a limited impact at a time when concise direction is required.
The topic of Eurobonds remained in contention with French President Francois Hollande using the event as a platform to promote the need for jointly issued debt. Meanwhile, Italian Prime Minister Mario Monti has also thrown his support behind implementing Eurobonds suggesting they should be considered "when the time is right, but not in too long." Nonetheless, nations with high barrowing costs in support of jointly issue bonds are likely find strong resistances from Germany who remains opposed to such measures.
We anticipate the day ahead to be lethargic on the currency front with regional equities likely to remain the key barometer. Supportive behavior noted around the 97.1/15 US cent region should keep the downside contained throughout the domestic trade with resistance likely to found at 97.7 US cents until we're once again at the mercy of European headlines to guide the way. At the time of writing the Australian dollar is buying 97.65 US cents.
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