The weakness of the USD continues, pushing our AUD to new post float highs of 1.0948.

Australia: Markets interpreted soft economic data out of the US overnight as the green light to keep interest rates low for an extended period. Fed Chairman Bernanke’s comments on Wednesday night confirmed monetary policy will be accommodative, and the AUD continues to be one of the currencies benefitting from the declining USD.

[Sign up here to get this report delivered to your inbox daily]

With the US GDP in Q1 expanding lower than expected at 1.8% (on an annualised basis) and higher weekly initial jobless
claims, we would have expected equity markets to be softer as well, but corporate earnings for Q1 generally continue to surprise on the upside.

In Europe and in the US, all major indices were higher with the Dow just under its three-year high, being up 0.6% to 12,763. The German DAX was up 0.9% as well. Oil and gold continue to remain strong with WTI crude at US$112 a barrel,
with Brent crude at US$124 per barrel and gold touching a new high of S$1538 per ounce and silver hovering near US$49 per ounce. Today in Australia private sector growth for March is to be released and the market expects growth for 0.4%. Activity is likely to be quiet today and we see the AUD trading in its new 1.0900 range today going into the weekend.

Majors: The US data disappointed on the downside, some of which is explained by severe winter weather and higher fuel and gasoline prices.

[Sign up here to get this report delivered to your inbox daily]

Spending on non-residential items was down 21.7% and residential spending fell 4.1%. Personal consumption was higher than anticipated by 2.7%. Weekly jobless claims rose for the third consecutive week by 25k to 429k. This helped the EUR to continue its march higher against the USD trading above 1.4800 this morning.

Trading is likely to be quiet with a 4-day holiday weekend in the UK starting with today’s Royal Wedding Holiday for Kate Middleton and Prince William followed by the May Day holiday on Monday. Japanese markets are closed today for the Show Day holiday.

Economic Calendar
UK Royal Wedding Holiday
US Fed’s Bernanke (Voter) Speaks
AUST Private Sector Credit MAR
US Chicago Purchasing Manager APR
US University of Michigan Confidence APR

More from IBT Markets:
Newsletter: To receive Global Markets update, sign up here