The Australian dollar trading at 1.069 USD is becoming a bit of a Groundhog Day price each morning, it has traded around that point each day the local stock market opened this week. Any confidence driven by earlier economic results in Europe and developments of the Greek debt issue are quickly unwound through the US session as further doubts emerge. Last night was no different with a decision on Greece now being pushed back to February 20th. The Euro was sold off all the way through the US session giving away nearly a cent and a half from its high to low overnight, closing the US session 15 pips off the low of 1.30432 USD. Data that also drove traders in a risk of direction was European flash quarterly GDP which showed the economy shrank this being the first time since the 2nd quarter of 2009, at -0.3%. Recession has been expected for the region but for how long and how severe still up for debate.
The US session offered little respite with weak equities helping drive US dollar demand; and the Australian dollar gave up about 85 pips from its peak overnight. Although Greek concerns weighed on markets, there were a few positives with demand for long term international purchases of US assets weakening from 61.3 Billion to 17.9 Billion for the month of December, as the safety play for US treasuries softened. We also had the Empire State manufacturing index ticked up for the 5 straight month indicating that spending, hiring, and investment are on the improve.
From a local perspective today is a day were Australian economic performance will drive currency markets with unemployment data due for release at 11.30 am, with 10,500 new jobs expected after last month surprise contraction and for the rate to rise to 5.3%. After last Friday weak trade balance data from China, any enhanced negative movement from local data is likely to increase the chances of a rate cut next month, and in effect lead to the AUD weakening. At the time of writing the Australian dollar is buying 1.0687 USD.