Jobs report set to shift the tapering timeframe

Australian Dollar:

In a generally mixed session yesterday the Australian dollar fell to a late afternoon low of 0.8864 when valued against its US Counterpart after a better than expected retail sales number in November was offset by a decline in the number of building approvals. Despite the retail sector which grew by 0.7 percent comfortably beating the forecasted read of 0.4 percent investors continued to short the domestic unit unwilling to pick it up when valued above the 89 US Cents mark. Lower this morning at rate of 0.8892 all eyes will be on this evening’s US non-farm payroll report with any positive employment result only set to fast track tapering expectations hence acting as a further drag on Australia’s currency.   

• We expect a range today of 0.8860 – 0.8930

New Zealand Dollar

The New Zealand dollar has struggled for momentum over the past 24 hours following the release of figures from China yesterday which showed slowing consumer prices had cooled year over year in December climbing by a below forecasted rate of 2.5 percent. Dominated by offshore developments this week markets appear all geared up for a better than expected US employment report later today bolstering tapering expectations which continue to act as a drag on New Zealand’s dollar. Having reached a low of 0.8231 when valued against its US Counterpart the Kiwi is lower this morning as it currently buys 82.50 US Cents.

• We expect a range today of 0.8220 - 0.8280

Great British Pound:

In a decision which has left many investors believing the ECB’s monetary stance is simply too tight the Bank of England’s announcement overnight to maintain interest rates at 0.5 percent whilst keeping the stock of asset purchases at 375 billion pounds was widely foreseen. Despite the FTSE 100 which dropped by 0.5 percent the Great British Pound enjoyed a positive day yesterday reaching a high of 1.6496 when valued against its US Counterpart. Opening stronger this morning at a rate of 1.6479 the Sterling is also in a higher position when valued against both the Aussie 1.8533 and the Kiwi 1.9970.

• We expect a range today of 1.8500 – 1.8560

Majors:

Liquidity has returned to the marketplace in a big way this week with the major focus for investors still being the timing of any future taper decision from the US Federal Reserve. Leading into this evenings all important non-farm payroll report which is expected to show the world’s largest economy added 200 000 more jobs last month, yesterday’s positive ADP jobs report mixed with a fall in  weekly jobless claims has only further fuelled the expectation that tonight’s result will favour a stronger US dollar. In an uneventful day for the world’s reserve currency the USD/JPY opens in familiar territory this morning at a rate of 104.753. Meanwhile in Europe overnight in a move which surprised very few the European Central Bank kept their underlying benchmark rate unchanged at 0.25 percent whilst pledging to keep interest rate lower for longer. Whilst bidding to support its ongoing economic recovery ECB President Mario Draghi refused to say that Europe had won its debt battle given growth remains weak amid fears of deflation. Slightly stronger this morning the Euro currently trades at a rate of 1.3602.

Data releases

• AUD: HIA New Homes Sales m/m
• NZD: No data today
• JPY: Leading Indicators
• GBP: BRC Retail Sales Monitor y/y, Manufacturing Production m/m, Industrial Production m/m
• EUR: French Industrial Production m/m, German Constitutional Court Ruling
• USD: Non-farm employment change, Unemployment Rate