AUD Breaks Ranks with U.S Equities, Euro Fears Dominate

Despite strength from global equity markets, currencies remained under pressure overnight led by the Euro which fell to near 2-year lows. For every positive thematic in the market, there's equal and opposite negativity holding back a sustained rally and although we've seen positive movements across European and U.S indices, risk currencies remain capped under the weight of Euro-region uncertainty. Weakness from the Euro coincided with a downgrade from ratings agency Egan-Jones which cut its rating for Spanish debt in Junk territory. Although a smaller firm then the three most watched ratings agencies, its considered a pre-cursor to what we may see from the big three, S&P, Fitch and Moody's.

Meanwhile, the Aussie dollar only found intermittent periods of support with resistance noted around ahead of the 99 US cent region before succumbing to a south-bound Euro with the EURUSD pair making a break to the downside of $US1.25-figure to fresh 23-month lows of $US1.2460. European indices recorded strong gains with the CAD and DAX both rising over 1 percent, while the FTSE trailed behind with pressures from southern Europe the primary stumbling block. German consumer prices grew at an annual pace of 2.1 percent in May according to official data released overnight, falling short of economists estimates and the previous reading of 2.1 percent.

Optimism surrounding Greek polls which signalled pro-bailout parities are gaining support underpinned gains across the Atlantic with U.S equities finding form. The S&P500 and DOW which both recorded over 1 percent gains. U.S consumer confidence fell in May to an index level of 64.9 from a previous 68.7. Analysts' expected a higher reading of 68.7.

The domestic session will see the focus shift to April retail sales data which is expected to see growth of 0.2 percent - down from 0.9 percent in March. Also on the docket is the construction work gauge - both are due for release at 11.30 AEST.