AUD surges through 0.94 on stronger unemployment data

Australian Dollar:

Onward and upward has been the trend following the Australian Dollar this week and it continued throughout trade on Thursday. The surprise drop in the unemployment rate from 6% to 5.8% and a stronger than expected employment change were the catalyst needed to force the AUD through resistance barriers around 0.94. Bolstered by the strong employment data the Aussie rallied to an intraday high of 0.9463 before drawing back slightly and consolidating between 0.9410 and 9430. This is the 2nd consecutive month of stronger employment data and provides encouragement to RBA officials looking to manage the transition away from the mining boom. With little headline data available domestically the focus today will turn to Chinese inflation numbers for further direction, however with an inherent bearish tone toward the USD filling the market we expect recent levels to be maintained.

• We expect a range today between 0.9375 - 0.9475

New Zealand Dollar:

The New Zealand dollar reversed early week gains in a session free of domestic provocations the currency was at the mercy of offshore data sets. Chinese Trade numbers showed a decline in both exports and imports and an overall narrowing in the trade balance highlighting the slowdown in world’s second largest economy. Coupled with Stronger employment numbers across the Tasman demand for the NZD diminished and the currency moved back below 0.87 and opens this morning buying 0.8680 US cents. With little headline data available locally the Kiwi will again be subject to outside stimuli and Key Chinese inflation numbers will likely govern direction throughout the Australasian session.

• We expect a range today between 0.8620 – 0.8740

Great British Pound:

Rallying in early trade Sterling moved through 1.68 against its US counterpart before retracing its steps and consolidating in the lead up to the Bank of England (BoE) rate announcement. The Central Bank, as expected, left rates on hold at 0.5% while the asset purchase facility was maintained. With investors searching for any changes or hint of an acceleration in tightening of monetary policy the Banks Monetary Policy Committee (MPC) offered little outside the recent guidelines. With Inflation still below the target 2% and elevated unemployment above 7% the BoE is cautious of reversing current stimulus plans before further evidence avails the recovery has established itself. After several failed attempts to break back through 1.68 the Pound opens marginally lower trading at 1.6782 this morning.  

• We expect a range today between 1.7775 – 1.7890

Majors:

Greenback weakness continued Thursdays as market fallout following Wednesdays FOMC minutes continued. The dollar slipped to three-week lows against its Japanese and Swiss counterparts despite stronger than expected unemployment claims. The reduction of 32,000 jobless benefit appeals was not enough to shake the spectre of the week’s bearish trend and the dollar fell below 101.50 JPY. Bolstered by weaker Chinese Trade data and a general shift in demand toward safe haven assets the Japanese Yen advanced against all of its 16 major currency peers. With little local data available the Euro reaped the rewards of a weaker USD and trades higher this morning at 1.3886. Attention now turns to Chinese CPI, US PPI and Consumer Sentiment data for further direction leading into the weekly close.

Data releases

• AUD: No Data              
• NZD: FPI (Food Price Index)
• JPY: Monetary Policy Meeting Minutes and 30 Year Bond Auction
• GBP: CB Leading Index
• EUR: German Final CPI and German WPI (Wholesaler Price Index)
• USD: PPI m/m, Core PPI m/m, Prelim Consumer Sentiment and Prelim Inflation Expectations