Strong employment numbers send Greenback higher

Australian Dollar:

After coming off a day with heavy gains the Aussie dollar consolidated into the Mid US94 cent range on Wednesday. The push lower was just before midday when the Trade Balance figures were released by the Australian Bureau of Statistics. The Trade balance was a 1.9 Billion dollar deficit which is the worst in over a year and a half and was substantially lower than forecast. The slump in the numbers is being attributed to the 9 per cent ($760 Million) fall in metal ore and mineral exports. The reduction in exports is a result of the drop in iron ore prices by over 30 per cent in recent times. Overnight the Aussie continued to slide after strong Employment data was released in the US opening this morning weaker at 0.9436 against the Greenback. All eyes today will focus solely on Local, Chinese and US data all of which provide valuable figures to give the higher yielding AUD direction.

• We expect a range today of 0.9395 – 0.9490

New Zealand Dollar:

As expected the NZ dollar had an uneventful Wednesday during Asian trade as the absence of any major Local and offshore data failed to move the higher yielding currency against the Greenback. Nonetheless a disappointing trade balance out of Australia helped the Kiwi gain back some of the losses experienced earlier in the week rallying nearly half a cent to highs of 0.9258 versus the AUD. Export commodity prices were shown to slide however this had little to no impact on the NZ dollar. Overnight the Kiwi seemed relatively unfazed by strong US numbers with a slight bias to the downside opening this morning slightly weaker at 0.8768 against the Greenback. Investors will focus today on offshore figures for direction as Thursday presents another day with no domestic numbers. 

• We expect a range today of 0.8730 – 0.8815

Great British Pound:

The British Pound has managed to reach the 6 year high that has recently been talked about versus the US dollar overnight touching highs of 1.7174 in a session with strong local data. The Sterling has been trending upwards recently and robust UK construction PMI numbers overnight saw the GBP continue to climb. The GBP’s rally against the US was limited as better than anticipated US job numbers softened the Pound’s gains opening today at 1.7167. The impressive economic data from the UK similarly allowed the Sterling to gain on the higher yielding currencies opening this morning stronger against the AUD(1.8183) and NZD(1.9568). The continuous string of positive data from the UK will continue speculation that the bank of England will be looking to raise interest rates in a quicker time frame than previously anticipated. All eyes this evening will turn to services PMI data from the UK for direction.

• We expect a range today of 1.8130 – 1.8220

Majors:

The main trend witnessed overnight was US dollar strength after robust economic figures were printed in relation to employment. The Non-Farm Employment Change showed an addition of 281k where forecast was only for 207k and previous numbers were 179k. US Fed Reserve Chair Yellen’s speech did not surprise last night as she followed script. GDP numbers for the Euro were on target when released last night however Spanish unemployment failed to impress. The Euro lost ground in the midst of these events and opens this morning weaker at 1.3657 against the US dollar. The EUR has gained close to 1 per cent over the last fortnight against the Greenback which will pose as potentially problematic for the ECB as it has recently been announced there are concerns over a strong Euro and low inflation.Tonight in what will be the main event for the week investors watch as US non-farm employment numbers and the ECB’s bid rate are announced

Data releases:

• AUD: AIG Services Index, RBA Gov Stevens Speaks, Building Approvals m/m, Retail Sales m/m
• NZD: No Data
• JPY: No Data
• GBP: Services PMI, Housing Equity Withdrawal q/q
• EUR: Spanish Services PMI, Italian Services PMI, Final Services PMI, Retail Sales m/m, French 10-y Bond Auction, Minimum Bid Rate, ECB Press Conference
• USD: Non-Farm Employment Change, Trade Balance, Unemployment Claims, Unemployment Rate, Average Hourly Earnings m/m, Final Services PMI, ISM Non-Manufacturing PMI, Natural Gas Storage