Investors yesterday found greater self-assurance in US optimism, this lead to a stronger USD overnight.
The strength came from two key indicators; the first piece of data to come out was the release of the US Market manufacturing PMI. This came out below expectations of 56, at a result of 55.5. This result was left unchanged from last month’s release. The second released that gave the USD some strength overnight was the US ISM manufacturing figure. Due to the significance of this release, investors found solace in the increased figure, despite being below expectations. As a rule of thumb, the ISM figure has two sub-components; these are Prices Paid and Employment. These two mechanisms in the ISM figure indicate overall sentiment levels and labour conditions. Labour conditions will generally give an indication of how strong the US non-farm Payrolls data can potentially be. Therefore, the respectable ISM data release could be a good indication that we may see strong results from the payroll figure at the end of the week.
Finally, a notable achievement from the US session was a very impressive economic optimism release at close of play. This put the cherry on the top of the US economy ‘cake’. Results came at a surprise, as sentiment levels of 45.1 in March and expectations of 46 for April were exceeded in a final figure of 48. One of variables that influenced this result was Federal Reserve Chair Janet Yellen’s announcement days earlier. This announcement carried word that the Reserve Bank will continue to support the American’s stabilizing economy. The key element investors were looking for was interest rate stability, which was confirmed to the relief of many.
The AUD amongst other higher yielding currencies felt news overnight, as they woke to find a weaker currency. Recently, the AUD has felt a strong resistance level around the 0.9270-80 mark. This has continued to force the Aussie dollar into submission as it has struggled to hold ground whilst sitting around those levels. Going forth, we may see some last minute volatility heading into the weekend as the above mention pay-roll data should stir some investor’s thoughts and may cause some last minute risk-aversion.