Global markets kicked off proceedings overnight with some moderate optimism before succumbing to the weight of global debt fears and falling U.S equities as the session drew to a close. Early in the session, Sterling rose to US$1.5000 on the back of better than expected retail sales data. UK Retails Sales outstripped expectation to recording growth of 2.1 percent in February against estimates of 0.6 percent rise - representing an annual growth rate of 3.5 percent.
Across the channel, the two day ‘Greece rescue’ summit also began in Brussels with the latest speculation suggesting a bail-out of the ailing economy could involve a joint effort by Europe and the International Monetary Fund to provide Greece with a €23 billion life line.
Economic data from the States saw the number of new applicants for unemployment benefits fell to 442,000 for the week ending March 20. This represents a decline of 14,000 new jobless claims from the previous week. Overnight US Federal Reserve Governor Ben Bernanke provided testimony before the House Financial Services Committee into the Fed’s views on current and future economic conditions. Staying true to the Fed’s pledge, Governor Bernanke once again re-affirmed the need for interest rates to remain at record lows for the near term in order to keep the economic recovery on the straight and narrow, citing continued employment woes and little in the way of inflationary fears will provide some monetary policy leeway in the near term.
Locally, we saw some strength out of the Aussie dollar overnight, peaking at 91.4 US cents before resuming a downward trajectory as equity markets retreated and a stronger greenback weighed on key commodities. At the time of writing the local unit is buying 90.7 US cents – We expect equity market movements to remain the key barometer in domestic trade.