AUD regains 0.90 on stronger employment data

Australian Dollar:

The Australian Dollar rallied strongly across the board throughout trade on Thursday and regained losses suffered earlier in the week as employment data beat market expectations. Unemployment remained unchanged at 6% while some 47,300 new jobs were added to the jobs pool, the biggest increase in full time employment in more than 22 years. The stronger reading was comfortably ahead of a market anticipated 15,000 and was the catalyst needed to push that AUD back through 0.90 barrier. The currency surged upward to an overnight high of 0.9104 before consolidating and moving lower as Chinese Industrial Production, Fixed Asset Investment and Retail Sales all disappointed investors. The string of weaker Chinese data has compounded fears the world’s second largest economy is grinding to halt and as tensions continue to simmer in the Ukraine risk appetite remains subdued this morning. The AUD opens this morning at 0.9030.

• We expect a range today of 0.8960 – 0.9100

New Zealand Dollar:

The New Zealand Dollar rocketed to a record high when valued against a trade weighted index yesterday as the Reserve Bank increased the benchmark rate from 2.5% to 2.75%. The 25 basis point mark up is the first in developed economies since 2011 and further enhances the Kiwi’s attractiveness as a high yield asset. While the move was largely anticipated across the market the currency unit was buoyed by Governor Wheeler’s suggestion that the Central Bank will continue to tighten monetary policy should inflationary pressures remain elevated. Having touched an overnight above 0.86 the NZD open this morning at 0.8540.

• We expect a range today of 0.8500 - 0.8600

Great British Pound:

The Sterling opens this morning relatively unchanged trading at 1.6622 with its US counterpart despite a volatile Thursday session. Having rallied from intraday lows below 1.6610 the currency reached highs above 1.6710. With little domestic data the Pound took its cues from domestic stimuli and benefited from Euro weakness stemming from comments made by ECB president Mario Draghi. Gains were then retraced as investors sought safe haven assets in the form of Japanese Yen and Swiss Franc ahead of next week’s MPC rate announcements and key unemployment data. The GBP opens weaker this morning against both the AUD and NZD trading at 1.8406 and 1.9448 respectively.

• We expect a range today of 1.8320 – 1.8480  

Majors:

European Central Bank President Mario Draghi has forced the Euro to session lows below 1.3850 signalling he and the ECB remain open to further loosening of Monetary Policy in a bid to avoid deflation. The comments sparked investors into action as they dumped the bloc currency unit and sent the Euro 1.3% lower against it Japanese counterpart. Despite stronger than expected retail sales and declining unemployment claims coupled with a decreasing budget deficit the Greenback was also sold along with commodity based assets as markets sought safety. However the stronger US data goes a long way to easing concerns the economic recovery has stalled and ads further sustenance to calls the recent string of poor data was unfairly influenced by extreme weather conditions. The upturn gives the Fed the support needed to continue its tapering program as markets anticipate a further 10 billion will be cut from the monthly stimulus program when the Federal Open Market Committee meets next week. The Japanese Yen is stronger across the board, advancing against all 31 of its major counterparts as tensions between the Ukraine and Russia continue to fester and fears surrounding the stability of growth in China increase. Risk appetite remains cowed as investors seek safe haven assets in the form of Swiss Franc and JPY.   

Data releases:

• AUD: No Data
• NZD: Business NZ Manufacturing Index
• JPY: Monetary Policy Meeting Minutes and Revised Industrial Production
• GBP: BoE Quarterly Bulletin, Trade Balance and CB Leading Index
• EUR: German Final CPI m/m and Employment Change q/q
• USD: PPI m/m Core PPI m/m and Prelim Consumer Sentiment