Following on from Monday’s outstanding session, US equities were able to continue positive momentum overnight ahead of tonight’s non-farm payrolls. Economic news saw Initial Jobless claims came in slightly better than estimated, recording a drop to 472,000 new claims for unemployment benefits for the week ending August 28 against the expected 478,000. The previous week’s claims were upwardly revised to 478,000 from the originally reported 473,000.
Pending homes sales surpassed estimates rising 5.2 percent in July against the expected decline of 1.5 percent however factory orders failed to meet consensus recording 0.1 percent growth in July against the expected 0.5 percent.
Across the Atlantic, as anticipated the European Central Bank held benchmark interest rates steady at 1 percent. In his post meeting address, ECB president Jean Claude Trichet upgraded Euro-zone growth stating “staff saw growth in a range of 1.4 and 1.8 percent this year giving a midpoint of 1.6 percent from the 0.7 to 1.3 percent seen in June.
Locally, after a mild retreat in yesterday’s session, the Aussie dollar regained composure overnight following US equities higher. The local unit rose to highs of 91.2 US cents, and currently remains a fraction below the 91 US cents levels.
Meanwhile, as the Australian election hangs in the balance of three independent politicians, Independent MP Bob Katter has weighed in listing the strength of the Aussie dollar a prime concern, asking the impending Government to “provide assurance that it will address the unfair and artificially high value of the Australian Dollar.” Mr Katter cited upward pressure is placed on the Aussie dollar by interest rates “which are out of step with international benchmarks.” A demand one would think to be highly unlikely in the event of either an elected Liberal or Labor government.
In the absence of local economic data today, with the expectation of a strong day in local equities we expect the domestic session to present steady to downside bias on the local unit today. However, all bets are off surrounding the release of non-farm payrolls tonight. 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.