Overseas data provides pockets of optimism

Overseas data provides pockets of optimism

By Tim Waterer (Senior Trader, CMC Markets)

Within the past week, financial markets have been served a dose of optimism from three key parts of the globe. US, Chinese and now European economic indicators have all provided pockets of optimism for investors on the approach to year-end.

US payrolls data on Friday surprised on the upside, a raft of Chinese data has come on the higher side of expectations and now the latest German economic sentiment reading has hit a seven month high, seemingly from leftfield. Investors are being lured back into the market now on growing expectations that the road may be less bumpy in 2013, however the fiscal cliff outcome could still throw a sizable spanner in the works when it comes to market projections for the coming 12 months.

The Australian Dollar has been able to make some significant forward progress in recent days with traders feeling more inclined to seek yield as a result of the rosier-looking global economic picture. The push above 1.05 has been building for some time with traders quickly latching onto the Aussie Dollar as each set of more upbeat economic data has been released from Europe, the US and China. With momentum on the side of risk assets the AUD could conceivably be eyeing a run to 1.06 before year-end should the rally into Christmas continue.

Today was about consolidation for the AUD as much as anything with little in the way of new market drivers. A surprisingly low consumer sentiment reading did little to upset the AUD which stuck mainly to the 1.0520-1.0530 range during Asian market hours.

The Australian sharemarket continued its steady December ascent thanks to another solid outing by the resource stocks, with the ASX200 having a dalliance with the 4600 level today. Market attention will be focused on the FOMC to provide further direction for the remainder of the week.
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