Aussie tumbles after strong US unemployment figures

Australian Dollar:

The Australian dollars struggles continued on Thursday underpinned by the US Fed’s impending time frame to an interest rate increase and poor domestic figures. The Aussie broke below the US79 cent threshold in early trade and after import prices were well lower than expectations carried on trading downwards. Import prices showed a smaller gain than anticipated at 0.9 per cent versus a 1.5 per cent forecast. Overnight impressive US numbers sent the Aussie spiralling lower touching 0.7718 before opening this morning substantially weaker at 0.7740. Today will see PPI numbers which should have a high impact on the recently volatile Aussie to end the week.

• We expect a range today of 0.7710 – 0.7810

New Zealand Dollar:

The New Zealand dollar was the worst performing currency of the majors over the last 24 hours being hit hard by the US FOMC statement and their own local rate decision. The Reserve bank of New Zealand has once more implied that a further depreciation of the higher yielding currency is required against the Greenback and the Kiwi fell and fell fast. The NZD dropped over 125 points against the US dollar and fell similarly against a range of other majors. The negative trade balance released shortly after had minimal affect as the NZ dollar continued to trade at lows of 0.7317. Overnight the Kiwi continued to tumble after US unemployment claims came in well ahead of expectations to open this morning at 0.7248. Today all eyes will focus on building consents and visitor arrivals as onlookers hope positive numbers can turn around the Kiwi’s fortunes. 

• We expect a range today of 0.7210 – 0.7310

Great British Pound:

The British Pound held its ground for the majority of Thursday’s trade after an on forecast release of housing price inflation. The numbers showed results in line with expectations and the Sterling sat steady at 1.5110 against the USD. The Cable fell sharply soon after as US unemployment figures shocked to the upside slipping as low as 1.5021 before opening this morning at 1.5038. The strong domestic figures did however help the GBP gain against the higher yielding currencies as the Aussie(1.9411) and Kiwi(2.0723) lost significant ground overnight. Heading into the weekend all eyes will focus on local lending numbers and offshore GDP figures in the US for direction.

• We expect a range today of 1.9350 – 1.9450

Majors:

The Euro was one of the few currencies which managed to hold its ground against the Greenback on Thursday despite German consumer price inflation turning negative. German CPI printed at -1 per cent just 7 days after the European Central bank released information of a 60 Billion Euro a month government bond program. It was the US dollar however which drew the spotlight once more as unemployment claims showed a substantially fewer amount of people applying for jobless benefits. The Greenback strengthened heavily across the board however the Euro managed to hold its ground opening this morning 1.1311. The US unemployment claims are sitting at levels not seen in over 14 years and these strong numbers lend to the idea of an interest rate increase occurring in the earlier months of the year. Heading into the weekend eyes will focus on the European CPI flash estimate while in US trade on GDP numbers.

Data releases: 

• AUD: PPI q/q, Private Sector Credit m/m
• NZD: Building Consents m/m, Visitor Arrivals m/m
• JPY: Household Spending y/y, Tokyo Core CPI y/y, National Core CPI y/y, Unemployment rate, Prelim Industrial Production m/m, Housing Starts y/y
• GBP: GfK Consumer Confidence, Net Lending to Individuals m/m, M4 Money Supply m/m, Mortgage Approvals
• EUR: German Retail Sales m/m, French Consumer Spending m/m, Spanish Flash CPI y/y, Spanish Flash GDP q/q, Italian Monthly Unemployment Rate, Core CPI Estimate y/y, Core CPI Flash Estimate y/y, Unemployment Rate
• USD: Advance GDP q/q, Advance GSP q/q, Advance GDP Price Index q/q, Employment Cost Index q/q, Chicago PMI, Revised UoM Consumer Sentiment, Revised UoM Inflation Expectations