Australia: The Australian Dollar has opened more than one US cent higher today, buoyed by improved investor sentiment on the global economic recovery. The AUD’s strength started early yesterday following the release of better than expected Australian employment figures for May. The data showed that the unemployment rate had fallen to 5.2% from 5.4%, while total employment had risen by 26,900. Economist’s forecasts were for the jobless rate to remain at 5.4% and employment to have added 15k jobs in the month. The AUD rallied above USD0.8300 following the numbers and more positive news out of Asia helped support the AUD above this level. China, the world’s third-largest economy reported yesterday its trade surplus rose in May with exports up 48.5% from a year ago. Meanwhile in Japan, the world’s second biggest economy grew an annualised 5.0% in the first quarter, which was above expectations. All this positive news restored some optimism in the market and we saw equities and commodities surge overnight. The AUD extended its gains, touching a high of USD0.8509 before settling back to around USD0.8460. With no domestic data due for release today, the AUD is expected to hold on to its gains with a chance of a move higher on the back of a positive night in the US equity markets. However being the end of the week, we may see a bit of profit taking as most of Australia enters into the Queen’s Birthday, long weekend.
Majors: The EUR along with other risk sensitive currencies rallied against the USD overnight following data out of Asia that reassured investors that the global economic recovery is on track. The improvement in risk sentiment saw investors switch back into equities and commodities which rallied strongly in the overnight session. The ECB and the Bank of England both left their interest rates on hold as expected and this helped to further soothe investor’s nerves. On the day China is due to release industrial production, CPI and retail sales data all for the month of May. While in the US they also have retail sales for May.