Greenback strengthens after positive US employment figures

Australian Dollar:

The Australian dollar ended the week unchanged on Friday at 0.9275 against the USD. The Aussie began Friday trading in a tight range barely moving away from its open just above 92.71 US cents. The only local data released was the producer price index and the AUD managed to slightly strengthen off the back of an increase to first quarter figures. It is believed that an upbeat PPI will lead to growing revenues from Australian firms which subsequently will contribute to growth in the economy. Overnight the AUD had its biggest move for the day as the US employment data was released. After the Australian Dollar remained strong on Thursday night when the US decided to taper further the Aussie’s fall appeared to be harder on Friday as the data pushed the AUD close to the US92 cent handle. However as the US trade continued the Aussie showed its strength once more managing to climb back and erase all of its losses for the session opening today at 0.9281. All eyes this week will turn to the Reserve Bank of Australia who meet on Tuesday as investors will watch cautiously to see if the cash rate remains on hold.

• We expect a range today of 0.9235 – 0.9325

New Zealand Dollar:

Similarly to its cross-Tasman counterpart the New Zealand dollar traded in a tight range for the Asian session on Friday not managing to deviate to far from the open against the US dollar. There was only one piece of local data released on Friday being the ANZ commodity prices which fell by 4 per cent for the month of April. This has returned the index to similar levels 8 months ago and dairy prices have been the primary driver. The NZ dollar managed to strengthen slightly on Friday against most of the major currencies with an exception to the Aussie dollar. Overnight the Kiwi once more followed a similar path to the other higher yielding currencies. The NZ dollar stumbled on the back of positive employment data out of the US dropping over half a cent. As the session progressed the Greenback weakened and the NZD climbed back higher than before the fall. The New Zealand dollar opens today at 0.8665 and with no local figures being released today all eyes will turn to Manufacturing data out of the US for direction.

• We expect a range today of 0.8620 – 0.8705

Great British Pound:

The British Pound began Friday trading quietly against the US dollar as investors waited cautiously for overnight Construction figures from the UK and employment data from the US. The GBP’s lack of movement followed through to the higher yielding currencies also failing to deviate from the open versus the AUD and NZD by more than a few points. Overnight the British Pound lost ground against the US being hit by poor domestic and strong offshore figures. The Cable was hit hard after the UK construction purchasing managers index dropped to 60.8 for the month of April where forecast was for a fall to 62.0. The US session did not bring much relief for the British Pound as the Employment data was strong from the United States. Today the GBP has made up some of the lost ground against the US dollar however opens lower at 1.6880. The Sterling’s poor data similarly helped the higher yielding currencies gain and the GBP opens today lower at 1.8181 and 1.9480 against the AUD and NZD respectively. Today is a bank holiday in the UK so not much volatility is expected for the British Pound and overseas data will be looked to for direction.

• We expect a range today of 1.8120 – 1.8240

Majors:

The Euro began the end of the week trading close to open prices against the US dollar as investors waited on key overnight figures for direction. The Unemployment rate in the EuroZone came in lower than expected at 11.8 per cent which was an unaltered figure from the previous month. Expectations were for a gain to 11.9 per cent. Mixed Manufacturing data was released as the German PMI fell to 54.1 in April from 54.2 the month before. Forecast was for an unchanged reading. Similarly the Spanish PMI fell slightly to 52.7 however in Italy the PMI was at a 3 year high of 54.0 for April. 

The US session strengthened the Greenback after positive employment data was released. The US Labour department announced 288,000 jobs were added to the market in April beating out expectations for a 210,000 increase. The unemployment rate fell to 6.3 per cent last month down from 6.7 per cent whilst only a smaller fall of 0.1 per cent was expected. Factory orders also rose in March to end a string of positive data from the US.

This lead to US dollar strength across the board and the EUR/USD touched lows of 1.3812. Today we see this currency pair opening at 1.3874 whilst investors turn their eyes to US non-manufacturing data overnight.

Data releases:

• AUD: AIG Services Index, MI Inflation Gauge m/m, Building Approvals m/m, ANZ Job Advertising
• NZD: No Data
• JPY: Bank Holiday
• GBP: Bank Holiday
• EUR: Sentix Investor Confidence, EU economic Forecasts, PPI m/m, Eurogroup Meetings
• USD: Final Services PMI, ISM Non-Manufacturing PMI