AUD surges as U.S Jobs numbers disappoint

Australian Dollar:

The Australian dollar closed higher after a relatively range bound week wherein the currency struggled to maintain support above 0.89. The dollar surged late Friday as U.S Non-Farm Payrolls wrote in well below expectations as figures revealed only 74,000 new jobs were added throughout December, staggeringly below the market expectation of 193,000 and the smallest increase since January 2011. The decisively poor reading sparked concerns among analysts that the Federal Reserve will ease the pace of reductions in bond purchases having only agreed to begin tapering stimulus measures at last month’s December meeting. The Australian domestic calendar remains relatively light with little headline data ahead of Thursday’s employment numbers with direction expected to come from offshore as investors recoup and turn attentions to US Retail Sales and Production Data due Tuesday and Wednesday.

• We expect a range today of 0.8925 – 0.9050

New Zealand Dollar:

Much like it Trans-Tasman counterpart the New Zealand dollar jumped Friday as weaker U.S employment data reduced expectations of an increased pull back in U.S Federal Reserve asset purchases. Having drifted lower for much of Friday as investor’s square positions leading into the release of key US data the Kiwi surged higher advancing from intraday lows of 0.8216 to close the day at 0.8299. Markets appear reluctant to push the NZD through resistance levels of 0.83 and with the local docket absent of any meaningful data today we would expect recent rages to be maintained leading into tomorrow’s Business Confidence data.     

• We expect a range today of 0.8250 – 0.8350

Great British Pound:

A mixed session saw Cable drop sharply in early Friday trade as industrial and manufacturing production for December remained unchanged and below market expectations. Plunging from 1.6480 to 1.6409 the sell-off was short lived and quickly offset by weaker U.S Non-Farm payroll numbers. Having gained 0.4% for the week the Sterling remains little changed this morning opening at 1.6481 as we look ahead to CPI Tuesday and Retail Sales Friday for further direction.

• We expect a range today of 1.8250 – 1.8375

Majors:

The Greenback slumped Friday as jobs numbers shocked investors. Figures showed only 74,000 new positions were added in December, the smallest monthly increase since January 2011 and well below the markets expectations of near 200,000. The poor showing reduced investors’ expectations that the Federal Reserve will increase the pace of its tapering program and sparked concerns as to the true strength of economic recovery. The U.S Dollar depreciated across the board loosing 0.6% and 0.7% against the Euro and Yen respectively as the Euro shot above 1.36 to close the week at 1.3667. A predictably dovish address from ECB president Mario Draghi following Thursday’s rates decision did little to dampen investor interest although as the divergence of Monetary policy continues we expect demand for the Euro to wain as investors chase higher yielding assets. The market now looks to Friday’s German Constitutional Court Ruling as a crucial point of guidance for future Euro Zone recovery efforts.   

Data releases

• AUD: ANZ Job Advertisements and Home Loan
• NZD: No Data  
• JPY: Bank Holiday
• GBP: No Data  
• EUR: Italian Industrial Production
• USD: Federal Budget Balance