Global markets breathed a sigh of relief overnight as buyers re-entered the market after what has been a difficult start to April. Spanish bonds yields eased and the Italian government was able to auction off 11 billion Euros of bills, its target for the sale and this supported some respite for risk assets with European indices all in the green, the Euro ticking up to a high of 1.3156 USD and followed by well performed US indices. The Dow Jones which has shed over 500 points this month improved by 0.7% bettered by the S&P index which was up 0.74%. As expected through this type of session the Australian dollar remained we bid and hit highs of 1.033 USD after trading as low as 1.0225 USD at the start of yesterday's domestic session.
US budget data which showed that its deficit widened to $198.2 billion in March, showing what a tightrope that the US economy still walks on. Although it didn't have any short term impact overnight, those looking at the US Economic outlook for long term currency moves will see the difficulty of an economy that is growing slowly but only through a trillion dollar deficits. The negativity of this print was pared by Fed Reserve's James Bullard stating that an improved US economy may push the unemployment rate down to 7.8% this year.
The local session today will hinge predominately on the employment change with six and a half thousand jobs expected to be added. With 10-15 thousand jobs needed each month to keep the unemployment rate on hold, the rate is expected to move from 5.2% to 5.3%. With the last four prints well wide of forecasts it creates a lot of uncertainty leading into this print at 11.30am, and with 3 of those in the negative it opens more chances of a downside result.
At the time of writing the Australian dollar is buying 1.0304 USD.