The Australian dollar has recovered a little from yesterday’s lows with our next move likely to be determined by today’s release of Australian employment numbers for February.

Australia: Labour force data, due to be released at 11.30 AEDT, will be closely watched by the markets this morning as it is seen as one of the key considerations for the Reserve Bank in their deliberations over official interest rates. A weak result increases the chance for an interest rate cut in coming months, particularly in light of the RBA’s statement released on Tuesday, which indicated they are ready to act if required. Market expectations are for the number of employed to have fallen by approx. 5k in February, while the unemployment rate is expected to come inmarginally higher at 5.2%.

Yesterday’s weaker than expected GDP result
took the market by surprise. Australia’s economy grew by a modest 0.4% in Q4 – much lower than the 0.8% the market had been expecting. The AUD initially took a hit, falling to a low of around USD1.0500, but some solid bids emerged at these levels and it wasn’t too long before the AUD was back to USD1.0550. Expect further volatility today should the employment numbers differ from expectations.

Majors: Investor sentiment turned positive again overnight as further progress was made in relation the Greek debt situation. 58% of eligible Greek bond holders have indicated they’ll sign on for the proposed debt bailout. This is still short of the 75% participation rate set by the Greek Government but collective action clauses may still be used to force the bond holders to accept the deals if sufficient support is not achieved. The EUR found some strength from the news, rallying from a two-week low against the USD. Equity markets were also boosted both by the developments in Europe, but also by some solid employment numbers out of the US. ADP private employment was up by 216k in February, helping to support the view that the US economy continues to improve, albeit at a relatively slow pace.

Economic Calendar
8 MAR AU Employment Change FEB
AU Unemployment Rate FEB
EU ECB announces Interest Rates
UK BOE announces Rates