Meanwhile, the US economy has suffered another set-back as December's retail sales data showed a contraction of 0.3 per cent against expectations of 0.4 per cent growth, adding credence to the Fed's pledge for interest rates to remain at current levels for an extended period. In recent times Fed Chairman Ben Bernanke was careful to paint a realistic view of the economic outlook, stating the economy faces formidable headwinds, and has continued to reaffirm the fed's stance on interest rates to remain at current levels for an extended period with employment conditions likely to keep a lid on inflation. We also saw Jobless figures for the week of January 2 rise to 444,000 against the previous 433,000.
Locally, the Aussie dollar has remained buoyant overnight with surprise surge in yesterday's jobs data resonating through global markets. The Australian economy added 35,200 new jobs in the month of September, reducing the official unemployment rate to 5.5 per cent - well in advance of economist predications of 10,000 new jobs created. The latest jobs data has certainly turned the tables on interest rate projections for the impending interest rate decision, with the market factoring in a 70 - 75 per cent chance of a 25 bps rise when the RBA reconvenes in February. We can expect the interest rate conjecture to heighten ahead of another week of economic feedback with inflation data due to be released early next week.
For now, the resilience of the economy spells continued support for the Aussie - considering the less than convincing economic feedback from the states, it has certainly increased the allure of the local unit as global trader pare bets on sooner than expected rate hikes in the States. At the time of writing the Aussie is buying 93.15 US cents and remains well supported ahead of what shaping to be some mild strength from the local equity market.