AUD/USD spikes to two-week high

Australia added the most full-time jobs since June 2017 last month, today’s employment report showed. The loss of 26.3k part-time resulted in a net gain of 39.1k jobs, building on the 21.6k added in December. The unemployment rate held steady at 5.0%, despite an uptick in the participation rate to 65.7%. Whichever way you slice and dice it, it was a strong report.

AUD/USD spiked higher to 0.7207 for a 0.6% gain on the day, but couldn’t sustain the move above Fibonacci resistance at 0.7203, the 61.8% retracement of the January 31 to February 12 drop, and was soon trading negative on the day.

AUD/USD Daily Chart

Source: OANDA fxTrade

Westpac calls for two rate cuts this year

One possible explanation for the Aussie’s U-turn could be attributed to the release of a report from Westpac (maybe perfectly timed for the jobs report) which now calls for two rate cuts from the RBA this year. Westpac’s economist has had a strong track record in forecasting RBA moves, and so the markets took notice of his expectations.

The Aussie dollar is now trading down 0.06% on the day at 0.7159 while the 10-year yield dipped to 2.08% from 2.10%.


Japan manufacturing sector in shock contraction

The latest Nikkei manufacturing PMI flash estimate suggested that Japan’s manufacturing sector contracted for the first time since 2016. The PMI slumped to 48.5 after a 50.3 print in January, and is the lowest reading since June 2016.

Nikkei Japan Monthly PMI readings

Source: MarketPulse

USD/JPY showed a muted reaction to the numbers and is now trading flat on the day at 110.83


US plays catch-up with busy data dump

The US calendar is full of events today, with a mixture of some delayed data due to the government shutdown and some on-schedule releases. The delayed durable goods orders for December are expected to show a mild rebound from November’s negative print while the on-time flash manufacturing PMI reading from Markit is seen dipping to 54.7 from 54.9. January’s existing home sales are seen showing a healthy rebound of +0.8% m/m from December’s disappointing -6.4%.

Prior to the US data dump Europe sees the release of flash PMIs for both Germany and the Euro-zone and hears a speech from the Bank of England’s Haldane.

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