Market confidence was hindered overnight as investors pondered the latest from rating agency Moody's, which suggested the US and UK are at risk of losing their AAA credit ratings. However, this proved to be more of a shot across the bows by the rating agency with the finer points of the report stating On balance, we believe that the ratings of all large AAA governments remain well positioned, although their 'distance-to- downgrade' has in all cases substantially diminished,
Economic news from the States saw the New York Empire State Manufacturing Index record a drop to 22.86 in March, slightly better than the 22 index level expected, however down from 24.91 in February. Industrial Production failed to meet expectation recording growth of 0.1 percent in February, against January's result of 0.9 percent. The Market consensus was calling for stronger growth of 0.4 percent.
Local economic data today includes the RBA minutes for the meeting held on March 2 which saw benchmark interest rates increased 25 bps to 4 percent. The communication by Governor Glenn Steven's suggested further adjustments would be likely with the final paragraph of the communication stating Interest rates to most borrowers nonetheless remain lower than average. The Board judges that with growth likely to be close to trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average.
At the time of writing the Aussie dollar is buying 91.4 US cents, we expect the Aussie dollar to be highly reactive to this morning's data, however any bullish language is likely to be dampened by last week's employment data which showed the Australian economy created 11,400 jobs in February; however the net result showed only 400 new jobs created when factoring in the 11,000 part time positions lost. This latest result is likely to have a significant impact on the RBA's stance on interest rates in the April meeting in conjunction with the minutes released at 11:30 AEDT this morning.