Better than expected jobless claims from the States failed to negate fears US economic activity may be grinding to a halt. The number of US citizens filing for unemployment benefits for the week ending August 21 outperformed forecasts falling to 473,000 from a previous 504,000. US equities reflected the shaky investor sentiment with the DOW and S&P falling .74 and .77 percent respectively.
With the decidedly negative sentiment in toe, the Aussie dollar followed US equities lower falling to lows of 88.3 US cent, albeit remain reasonably composed considering the degree of concern resonating through markets. We did however have a weaker greenback against the Euro which has been able to remain above US$1.27 - as result key commodities were able to remain fairly buoyant.
Market participants are keenly awaiting tonight’s GDP result in the US which is expected to show the economy grew at an annual pace of 1.4 percent against a previous 2.4 percent. You would expect market participants to be fairly apprehensive ahead of these figures and also keenly awaiting Fed Chairman Bernanke’s address in Kansas.
In the absence of local economic guidance we expect a reasonably subdued day of trade for the local unit. Local and Asian equities will be the primary driver, barring any major market movements there, we don’t envisage any major movements today. We expect however traders will be on guard ahead of tonight’s news out of the states; this has the propensity to move markets to a great degree and will no doubt resonate through to the local unit.