The greenback continued its latest winning streak on Friday initially helped by a surge in US GDP and stronger consumer sentiment. US Gross domestic product surpassed expectations recording a 2.1 per cent jump in the fourth quarter against a previous rise of 2.2 per cent in the third, to represent annual growth of 5.7 per cent. Economist had forecast an annual rise of 4.5 per cent or 1.3 per cent quarterly. The Reuters/Michigan Consumer Sentiment Index also reflected a positive start to 2010 with the index rising to 74.4 in the month of January, against expectations of a reading of 73.2.
Despite an initial helping hand from the better than expected data, equity markets turned south as investor sentiment teetered on the edge of fear and optimism. This sentiment also gave the greenback a leg up against major counterparts with the higher yielding counterparts continuing a downward trajectory. The Aussie dollar closed at fresh one month lows of 88.5 US cents as key dollar traded commodities continued to take a hit on the back of the latest burst of energy on the US currency. At the time of writing the Aussie has retreated further buying 88.25 US cents - we expect the direction of the Aussie to be governed by key economic data due for release which will see movements particularly sensitive given tomorrow's interest rate decision. Key data this morning includes the TD Securities/ Melbourne Institute monthly inflation report, ANZ job advertisements and the House Price Index.