• Mixed data underscores rate decision.
• Greece continues to grab headlines.
• Risk appetite rolls on, AUD puts the gloves back on.

The data out of Australia over the last week has been mixed and underscores the rate decision by the RBA last week. Of most interest was the Unemployment Rate which remained firm at 5.3% as companies added 19,600 jobs during March which is in stark contrast to the 9.7% in the United States. This week we saw a recovery in the Home Loans figure -1.8% which the RBA is monitoring as an indicator of whether a Housing Bubble is forming. NAB Business Confidence and Westpac Consumer Confidence were both down on the previous month as the economy feels a pinch from recent rate hikes, however both figures are tracking relatively high. The country’s Terms of Trade is the current focus for the RBA which is considering the affect of the demand from China coupled with gains in commodity prices.

Greece has continued to steal headlines this week, as sovereign debt prices were in free-fall as yields continued to push higher, stoking speculation that Greece would default. This paved the way for an international rescue package of EUR 45B, with the size and terms significantly better than the market expected with the 3year bonds having an interest rate of 5%. This is in contrast to the Greek three year bonds which had been trading at 7.19% which was considered unsustainable. This bond issue financed by the EU and IMF is a strong result for the EUR which has recovered some of the ground lost this month. The sovereign debt positions of other EU members is now being closely watched as debt yields for Greece were stabilised.

The stellar gains in the Aussie against the majors over the last week, is in line with gains in overseas equity markets which have consistently performed well regardless of the volatility surrounding sovereign debt. Since this time last week, the S&P500 is up 1.26% and the local currency has followed suit which is closely tied to risk sentiment and the region’s economic recovery.

The Aussie is riding high on positive sentiment towards the local economy and despite some soft economic data has shown resilience to hold firm at these levels.

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