Following on from a less than convincing day of trade in the domestic session, a switch in sentiment was seen in UK and European markets overnight with a retreat on commodities and metals weighing on equity markets. Economic indicators from the UK showed Business Investment fell 3 Percent for the third quarter, representing an annual decline of 21.7 percent. Economist had expected a decline of 3.5 percent or 22.9 percent on year.
European data showed Industrial Orders for the third quarter rose a seasonally adjusted 1.5 percent for the month of September, beating analysts' expectations of a 0.7 percent rise, which represents a yearly decline of 16.5 percent.
Risk aversion set the scene ahead of the US equity market open as investors flocked to the low yielding US Dollar and Yen. This switch to 'safety' saw the greenback make considerable ground against major counterparts ahead of preliminary GDP figures from the states, as traders bet on a greater decline in growth than initially estimated. As anticipated US Gross Domestic Product came in below consensus growing at an annualised rate of 2.8 percent in the third quarter, falling short of the 3 percent estimated.
US Consumer Confidence figures came in better than expected, recording a rise to 49.5 for November, against an upwardly revised 48.7 in October. In contrast, manufacturing data showed a surprise fall with the Richmond Fed Manufacturing Index declining to a level o f 1 in November against expectation of a reading of 10.
The release of the FOMC minutes for the November meeting reiterated the Fed's stance on keeping interest rates low for an extended period, stating the path of short-term rates going forward would be dependent on the evolution of the economic outlook. This of course is highly reliant on inflationary pressures, which the minutes pointing out an increase of commodity and import prices stemming from a weak dollar could boost inflation pressures.
The Aussie dollar has recovered from overnight lows of US$.9131 to current levels of 92 US-Cents. With little in the way of economic data locally; we are likely to see movements governed by equity market activity - which may lose ground given the negative lead from global markets overnight. We are also likely to see further strength from 'safety' currencies such as the USD and Yen, as traders look to unwind riskier investments ahead of the Thanksgiving holiday in the states.