After a poor start to the week, the Aussie dollar turned higher overnight recording solid gains against the greenback and Euro. The local unit has made a convincing break back through 99 US cents overnight after yesterday looking vulnerable to further downside with price action falling to lows of 98.61 US cents. Given US Markets were closed as US citizens observed Martin Luther King Day, key directives were few and far between with investors instead diverting their attention European markets.
The Euro's positive run hit a road block coinciding with the meeting of Euro-zone finance ministers for the Economic and financial affairs council in Brussels, with the topic of an extension to the European Financial Stability Fund like to take centre stage.
Last week saw the appeal of the Euro rejuvenated amid concerns that Portugal could become the latest economic casualty in the Euro-Zone. A slight shift in language from European Central bank and solid debt auctions from Portugal and Spain enough to keep the Euro on a north-bound trajectory against that of its major counterparts.
Nevertheless, a new week brings a new round of concerns with the viability of EFSF under the microscope - this has translated to broad based weakness in the Euro with price action retreated through US$1.33 to lows of 1.3243. At the time of writing the Euro is buying US$1.3290.
The day ahead brings little in the way of major themes to move the Aussie and we expect local equities to sway price action - however the main event for the local unit this week will come from China on Thursday.
Chinese GDP is expected to fall from 9.6 to 9.4 percent with Consumer prices also expected bear the brunt of recent tightening measures to fall from 5.1 to 4.6 in the month of December. Expect any significant deviation from estimates to spark the usual post-china data release volatility. At the time of writing the Aussie dollar is buying 99.3 US cents.