Global markets continued a positive trajectory overnight as investors remained optimistic considering the recent events from Greece and some positive economic data keeping equity markets buoyant. This optimism translated to a risk fuelled flock to higher yielding assets with key commodities and higher yielding currency the primary beneficiaries.
To recap last week’s events The European Union and the International Monetary Fund have agreed on a joint effort to provide assistance should Greece or any other European country should be at risk of default. Under the arrangement European nations would be required to kick in funds into a ‘bail out’ fund based on their GDP and population – The IMF are also required to contribute. We consider this joint effort more of a symbolic gesture with the very premise of a back-stop in the event of a potential default has brought some confidence back to global markets.
Economic data from Europe saw Germanys Consumer Price Index surpassed estimates recording 0.5 percent growth in March representing annual growth of 1.1 percent. Economists had forecast more moderate growth of 0.3 percent of 0.9 percent on year.
Across the Atlantic the US saw Personal Consumption rise in line with estimates recording growth of 0.3 percent in February, after recording previous growth of 0.5 percent. Personal income remained unchanged in February against a previous 0.1 percent rise in January.
Locally, a surge in risk appetite saw the Aussie dollar rise to highs of 91.8 US cents overnight and remains buoyant at current levels of 91.7 US cents. We expect investors will be focusing on key data such as Wednesday retail sales data which is expected to show moderate growth of 0.3 percent in Feb against a previous 1.2 percent. We can also expect the interest rate conjecture to reignite ahead of next Tuesday’s interest rate decision.
The local unit will also be contingent on non-farm payrolls to be released in the States on Friday. The US economy is expected to show 190,000 new jobs created in March against the previous losses of 36,000 to keep the unemployment rate steady at 9.7 percent.