Despite progress surrounding political uncertainty in Greece, markets continued to focus on the economic plight of southern Europe overnight with Spain back in the frame. Spanish 10 yr yields surged above the psychological milestone of 7 percent overnight to another euro-era high of 7.16 percent, signaling further dismay over the country’s ability to regain economic composure. This 7 percent level is particularly important for investors which saw Greece, Ireland and Portugal sharply deteriorate as borrowing cost became too great to raise capital – all of whom went on to requested financial aid. Although Spain has already sought financial assistance for the troubled banking sector, diminished appeal for Spanish government debt may see a sustained break above the 7 percent region suggesting a sovereign bailout is just around the corner. With almost a quarter of the working population unemployed, the fear is Spain’s current banking crises may morph into something more sinister.

European stocks finished mixed with the CAC falling 0.7 percent will Germany’s DAX managed to claw out gains to finish 0.3 percent higher on the day. U.S indices also failed to make any decisive moves one way or the S&P500 closing 0.14 percent higher.

We saw a notable divergence between the Euro and other risk associated currencies with commodity bloc currencies strengthening over the latter part of U.S trade while the Euro has dropped near 200 pips over the last 24-hours. At the time of writing the Euro is buying $US1.2570. After to slipping to lows of 100.56 US cents, the Australian dollar resumed its north-bound trajectory with price action making a break back above the 101 US cent level.

Locally, the focus will now turn to the release of the RBA minutes for June which saw Stevens and Co cut benchmark interest rates by 25bps. The ensuing statement showed moderate domestic growth, ongoing economic turmoil abroad amid subdued inflation outlook “afforded scope for a more accommodative stance of monetary policy.” Despite the RBA’s recent policy easing initiatives, recent feedback from Glenn Stevens has taken a realistic tone suggesting a need for local industry to adapt to changes in global conditions with emphasis on the importance of business productivity improvement, particularly those sectors struggling under the weight of a high Australian dollar. At the time of writing the Aussie dollar is buying 101.15 US cents.