The main feature of overnight Asian trade has been further strength in the aussie dollar, AUD/USD presently up .7530 compared to a North American close Wednesday around .7480.
The improvement came on the release of much better than expected April jobs data. Median forecasts had been calling for a fall in jobs of some 25, 000, with the unemployment rate rising to 5.9% from 5.7%, What the market got was a big shock, the Australian economy adding 27,300 jobs, with the unemployment rate falling to 5.4%.
Elsewhere narrow range bound trade was the order of the day, the market effectively on hold ahead of events later today. We have a triple whammy, with Bank of England and European Central Bank policy announcments being followed later in the day by the official release of US bank stress test results.
Personally think two of the three events could prove relative damp squibs. The Bank of England is almost certain to keep rates on hold and is unlikely to announce any real change in its quantitative ease programme.
The release of US bank stress test results could also have limited impact given that the results have already been extensively leaked.
That leaves the ECB policy announcement and there remains a great deal of uncertainty surrounding the outcome. On balance the market still favours a 25 bps rate trim and some sort of announcement indicating the introduction of quantitative ease.
