True to form, Aussie dollar movements overnight moved in tandem with US equities which rebounded strongly after a week in the doldrums. The general consensus from market participants at the moment is stocks have been oversold, this in conjunction with by better than expected earnings estimates from US bank State Street helped the Dow return above the psychological 10,000 mark with the broader S&P 500 index gaining over 3 percent on the day.
From 5pm EST yesterday, the Aussies has put on near 2 US cents to highs of 86.65 US cents. The Euro also maintained its perch above US$1.26 however upward momentum was thwarted by less than convincing data from Europe’s largest economy. German factory orders declined 0.5 percent against a previous rise of 3.2 percent. Economists had expected factory orders to rise 0.5 percent. Euro-zone Gross domestic product grew 0.2 percent in-line with estimates to represent an annual growth rate of 0.6 percent.
Aussie dollar movements will be contingent on local employment data coming up at 11.30 AEST. The Australian economy is expected to have created 15,300 in June against a previous rise of 26,900 to keep the official unemployment rate steady at 5.2 percent. We expect any significant differential from expectation to spark strong movement in the local unit. Better-than-expected numbers are likely to carry the Aussie closer to the 87 US cents. At the time of writing the Aussie dollar is buying 86.42 US Cents.