The Australian Dollar has opened up this morning slightly above 1.0700 after another day of volatile trading on Friday when the AUD bounced to a high of 1.0800 after better than expected jobs data in the US for April was released.

Australia: This bounce was after the AUD had traded below 1.0600 as the profit taking and liquidation of commodities continued. With the US market being prepared for a softer jobs number in line with recent figures that point to a lower growth rate in the US and world economy over the next 12 months, the increase in non-farm payrolls of 244k versus an expected increase of 185k sent equity markets up strongly along with the AUD.

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European indices were all up strongly with the German DAX gaining 1.6%, the FTSE up 1% and this rally extended into the US where all indices were up strongly at the open and the AUD touched over 1.0800 only to fall back later in the session
as reports surfaced that Greece was considering leaving the EUR. This issue pushed the AUD back down and equity markets softened with the Dow and S&P 500 both finishing only 0.4% higher.

Gold staged a comeback after its recent sell off to finish higher at US$1,495 ounce while silver continued to slide but at a much slower pace after the massive sell off last week. Oil rose after the jobs number but then declined as talk about Greece and the EUR grabbed the attention of the market finishing at US$97 a barrel for WTI and US$109 for Brent crude.

The AUD looks relatively firm as the market generally expects another rate rise as early as next month after the RBA’s minutes focused on their concern inflation will exceed the top end of their target range (3%) by the end of the year. Tomorrow night the budget for 2011-2012 will be handed down and any important changes have already been leaked.

Majors: With all markets riding high with the better than US jobs data, a report that Greece may leave the EUR sent the USD quickly higher which improved the AUD/EUR cross rate. Several EU officials denied the report although new talks are beginning to extend and possibly restructure the Greece aid package.

In the UK, a higher than expected PPI result for April pointed to a possible end to the UK’s version of quantitative easing earlier than later.

In Canada, their jobs numbers for April increased 58k versus an expectation of 15k. In the near term, we would expect the EUR to be quite volatile.

Economic Calendar 9 MAY
AUST ANZ Job Advertisements APR
AUST NAB Business Conditions / Confidence APR
EC Sentix Investor Confidence MAY
GE Current Account (Euro) MAY

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