Gearing up to the non-farm payrolls in the states, overnight investors were encouraged with ADP employment data showing 42,000 new jobs created in July against a previous 19,000 new jobs. US equity markets finished the day in the black with the DOW and S&P 500 rising .40 and .60 percent respectively.

We also saw a fundamental switch in the appeal for the greenback, which surged against major counterparts on the back of growth in the services sector. The ISM Non-Manufacturing Index surpassed expectations rising to a level of 54.3 from a previous 53.8. This saw the USD make considerable ground against Sterling and the Euro and was able to return from 9 month lows against the Yen. Although this is far from a convincing trend of US Dollar strength, it certainly provides an indication the appeal for the greenback remains in play when market sentiment is strong. Importantly, this also adds credence to the argument we may be in for another burst of energy from the USD given better-than-expected non-farm payrolls in the states tonight.

The fortunes of the Aussie dollar continued to appreciate overnight assisted by a return to strength from US equities, commodities and energies. Whilst the fundamental driver of the greenback against most major currencies remain cloudy, a continuance of this risk-positive sentiment in the states will nearly always see higher yielding currencies such as the Aussie receive the balance of risk. This positive sentiment assisted the local unit to rise to highs of 91.85 US cents - now in sight of the 52 week high of 94.06 US cents.

In the absence of local economic news today, the local unit is likely to be directed by local and Asian equity movements. Technically we’re ready for a pull back with the RSI suggesting an imminent reversal; however will the punters be ready to pull the sell trigger against a back drop of positivity? After the Aussie equities close up shop for the day, we are likely to see earnings from RIO Tinto guide sentiment and off course a last minute adjustment to exposures ahead of non-farm payrolls tonight could prove to soften Aussie price action.