The Australian dollar was the key gainer in the Wednesday session, advancing by nearly 2.4% against the greenback, while the Canadian dollar firmed by over 1.5%. The US equity bourses posted strong gains, with the S&P 500 and Nasdaq rallying by almost 3% and the Dow Jones higher by over 2.5%. Crude oil also clawed higher, climbing just shy of the $74-per barrel to improve by 2.75%.
The economic reports released today were mixed as traders shrugged off the disappointing ADP employment change, instead focusing on strong data from Australia and China. Australia's second quarter GDP printed better than forecast, improving by 1.2% and beating calls for an increase of 0.9% versus an upwardly revised 0.7% growth rate in the previous quarter. On an annualized basis, the Australian economy expanded by 3.3%, outpacing calls for an increase of 2.8% from 2.7% a year earlier. Meanwhile, data from China, manufacturing PMI improved in August to 51.7 from 51.2, while the HSBC manufacturing PMI index edged up to 51.9 from 49.4. The Australian and Chinese data mitigated fears for a sharp economic pullback and fuelled improved risk-appetite among the global equity bourses.
The US economic reports were mixed, with private sector payrolls as reported by ADP declining by 10k and missing calls for an improvement of 15k jobs versus 37k jobs added previously. The August Challenger job cuts improved to -54.5% compared with the previous reading of -57.2%. Rounding out the reports was a better than forecast report on manufacturing ISM for August, edging up to 56.3 compared with a 55.5 reading in the previous month.
Key data are scheduled for release on Thursday, including Q2 non-farm productivity, unit labor costs, weekly jobless claims, July factory orders and pending home sales. Weekly jobless claims are forecast to edge up marginally to 475k from 473k. Pending home sales are estimated to decline by 1.0% in July following a 2.6% decline from June. Markets will be most interested in the weekly jobless claims, particularly ahead of the closely anticipated non-farm payrolls report due out on Friday. The overall tone this week has been for increased risk-appetite amid improving sentiment for the global economic recovery.