US GDP result stems the bleeding

15.28 AEDT, Monday 29 October 2012

US GDP result stems the bleeding

By Tim Waterer (Senior Trader, CMC Markets)

The US GDP result appears to have momentarily at least stemmed the bleeding for riskier assets which were pummelled last week at the hands of a dismal round of US corporate earnings. Psychologically the market needed this result, even if federal Government spending did seem to prop up the number to a large degree.

US Non Farm Payrolls data looms as the big mover and shaker of financial markets this week, and any potential rebound of sorts after last week’s sell-off could be put on hold until we see if the US labour market is continues to be sluggish.

The AUD was mainly in consolidation mode to start the week after receiving a boon from the US GDP last Friday. With no economic releases today there was a dearth of new drivers for the currency and therefore nothing to make it challenge the 1.04 level during Asian trading hours. For the most part today the AUDUSD rate seemed content to sit tight in the 1.0350-1.0370 range. With trading in the US likely to be interrupted by Hurricane Sandy, Europe will be the main source of direction for the currency market this evening.

Following the heavy selling which characterised trading last week, today was all about ‘righting the ship’ on the Australian sharemarket. Solid US GDP data offered a reprieve which was capitalised on by the Materials and Energy stocks and this had the ASX200 again heading in the direction of the 4500 level. Looking further ahead, Chinese Manufacturing PMI data due Thursday could have a significant impact on how our key mining stocks fare as the week progresses.
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