AUD rally softens in face of stronger US jobs numbers

Australian Dollar:

After rallying strongly throughout last week the Australian Dollar maintains most of its recent gains holding above 0.90 moving into a fresh week of trading. Having soared to 3 month highs investors saw RBA governor Glenn Stevens gloss over the recent AUD upswing as he addressed the House of Representatives Economic Committee on Friday morning. While maintaining a stance that could only be describe as cautiously optimistic the RBA head failed to revert to the beating he and his fellow constituents handed the currency in the fourth quarter of 2013, a move seen to cement the central banks shift to a more neutral Monetary Policy approach. Touching intraday highs of 0.9128 the AUD was reigned in throughout the North American session as US jobs numbers firmed and Chinese exports declined sharply. 175,000 new jobs were added throughout February while exports from China dropped 18.1%, a dramatic decline given expectations were predicting a 7.5% improvement. The stronger than expected reading out of the US labor department reiterated the Fed’s belief that January’s poor reading was simply a blip in the path to recovery and firms expectations for continued reductions of stimulus. Attention now turns to Tuesdays Nab Business Confidence.

• We expect a range today of 0.8980 - 0.9080

New Zealand Dollar:

The New Zealand Dollar weakened moving into Fridays close as stronger than expected US jobs numbers brought about a Greenback rally. Having strengthened through much of last week the Kiwi drifted downward falling from 4 month highs above 0.85 as delivery of 175,000 new jobs surprised markets while added pressure came about in the form of declining Chinese exports, down 18.1% for February. Attention now turns to fourth quarter manufacturing numbers ahead of Thursday’s much anticipated RBNZ rate announcement where it is widely touted that the central bank will raise rates by 25 basis points to 2.75% in a bid to combat a burgeoning housing bubble.

• We expect a range today of 0.8400 – 0.8500.

Great British Pound:

The Great British Pound remains relatively unchanged against its US counterpart having weakened to near one month lows against the Euro. As the ECB suffocated concerns surrounding negative deposits and continued monetary policy easing the GBP slipped some 0.6 percent throughout Friday as it’s central bank, the BoE, maintained its own economic stance and offered investors nothing new. Monday’s docket remains quiet and attention turns to Tuesday’s Inflation Report and Manufacturing Production figures as analysts look for further signs to support the strengthening British Economy. Sterling opens higher against both the Aussie and Kiwi    

• We expect a range today of 1.8425 - 1.8580  

Majors:

The U.S Dollar rallied strongly on Friday as jobs numbers released by the US Labor Department showed 175,000 new positions were added to the employment pool throughout February comfortably outgunning market expectations. In the face of recent severe and extreme weather conditions the reading suggests an underlying strength in the overall economy however a slight increase the unemployment rate, from 6.6% to 6.7%, acts as a reminder that the economy still faces considerable headwind and is far from sailing into smoother water. The Federal Reserve has maintained December and January’s poor labor market numbers were only momentary blips in the path to recovery and February’s reading helps reiterate their stance and firms up expectations that tapering will continue unhindered moving forward. Attention now turns to Thursday’s economic calendar and Core Retails Sales for further Direction. The Euro held onto Thursday’s gains as fears the ECB would revert to negative deposits in a bid to stimulate faltering growth and expansion were largely eliminated. ECB President Mario Draghi confirmed the Central Bank was not going to ease policy any further in the near term. Both USD and Euro rose against Yen as demand for the safe haven asset abated in the face of stronger risk sentiment.

Data releases

• AUD: No Data
• NZD: Manufacturing Sales Q/Q
• JPY: Current Account, Final GDP Q/Q, Bank Lending Y/Y & Economy Watchers Sentiment 
• GBP: MPC Member Bean Speaks
• EUR: French and Italian Industrial Production M/M, Sentix Investor Confidence and EuroGroup Meetings
• USD: FOMC Member Plosser Speaks