Following on from the domestic session, the Australian dollar continued its northbound trajectory overnight with strength from US equities providing a platform for further strength. The S&P500 surged 2.8 percent on the day after strength from European markets gave US equities a solid footing after the German Federal Constitutional court ruled Germany was not in breach of law by participating in the bailouts of Greece, Ireland and Portugal. Also in focus was President Obama's speech coming up this evening which is expected to see the unveiling of a grand job creation plan said to be worth $US300 billion.
Across the Atlantic, all eyes were on Italy's Austerity vote. After a series of revisions, an austerity plan to the tune of 54-billion euro's was approved by the Senate, with the last hurdle a vote in the lower house chamber of deputies. This of course represents a significant step in Italy's plight to regain economic composure but still unlikely to see the pressure off the Berlusconi government. Italian bonds rallied sending the corresponding yield markedly lower to from 5.46 to 5.22 percent with some assistance from the ECB who was reportedly buying Italian debt.
The day ahead will see the focus on employment numbers with the Australian economy expected to have created 10,000 new jobs in August from net losses of 100 jobs in July. We expect some reasonable upside to be had for the Aussie dollar should today's jobs numbers outperform expectations but we likely to see the steam run thin around the 107.3 US cent levels. Intra-day support can be seen around 106.25 and 105.9 US cents. At the time of writing the Aussie dollar is buying 106.5 US cents.