After a decidedly nervous August, investors kicked off the month of September on a buying spree with a little help from some strong global economic news. Strength in manufacturing from China and a surge in local GDP helped US investors to look on the bright side from the get-go, but it was stronger manufacturing data from the US which kept the momentum alive. US equities roared with the DOW and S&P rallying 2.5 percent and 2.95 percent respectively. ISM manufacturing data outstripped expectations recording a level of 56.3 from a previous 55.5. Analysts expected a slowdown to a level of 53. A reading above 50 indicates economic expansion.
After a strong rally on the back yesterday’s strong GDP result the Aussie dollar continued a strong upward trajectory overnight reaching highs of 91.15 US cents. Yesterday local GDP surpassed estimates to record 1.2 percent growth in the second quarter against the expected 0.9 percent growth to represent annual growth of 3.3 percent.
This morning the Aussie dollar has shown early signs of consolidation easing back through 91 US cents to current levels of 90.9 US cents. It’s going to be hard to keep the momentum alive throughout the domestic session however we could see the Aussie remain supported by what’s shaping up to be a solid day in local equities and another strong trade balance result to be released at 11.30.
But let’s not get too excited, we have a major risk event in the form of Non-farm payroll in the US tomorrow night, and if last night’s ADP employment data is anything to go by it may not be on the better side of expectations. The ADP employment change which is seen as a precursor to Non-farms recorded 10,000 job losses overnight against the expected 20,000 jobs created.