Despite consumer confidence on the rise, European economic data overnight showed a greater than expected contraction with Euro-zone Gross Domestic Product declining 0.2 percent for the second quarter, the consensus was for a fall of 0.1 percent. On the 3rd of October the International Monetary Fund indicated the Euro recovery is gathering pace with the Director of the IMF's European Department - Marek Belka - stating Growth is around the corner, but the recovery will likely be slow and fragile.

We expect the European Central Bank will re-iterate this sentiment with their interest rate announcement tonight in which rates are expected to remain at 1 percent. The market reacted accordingly last night to the less than convincing GDP result, erasing earlier gains against the greenback. The Euro is currently buying US$1.4688 down 35 from pre GDP figures of 1.4723.

Overnight the Australian Dollar hit fresh 14 month highs reaching levels of US$.8951 before retracing back below US$.8900. Price activity on the Aussie Dollar was largely governed by some mild US Dollar strength as investors pondered if the greenback has fallen too far too soon. This placed pressure on Crude oil which dropped to lows of US$68.88 overnight.

The Aussie Dollar appears to be gathering strength ahead of the local jobs data this morning. Employment Change for the month of September is expected to show a further 10,000 people unemployed in comparison to the drop of 27,000 recorded in August.

If this key data prints strongly, it will at the very least provide credence to the recent interest rate hike by the Reserve bank. We expect however the movements of the Aussie Dollar today to be highly sensitive to any dramatic changes in employment. Given better-than-expected jobs figures, we consider a push towards US$.9000 likely post figures.