US Employment Rate Rises, Leaves Door Ajar for AUD
AUD
The AUD turned around its recent downward slide into the weekend, posting gains across most major currency pairs to finish the week. The firmer Aussie was the beneficiary of a weaker USD as a result of Friday night's nonfarm payroll data (see below) and commodity gains. Local Equities were mixed, the ASX was up +0.6%, Nikkei up +0.3% while Shanghai Comp was down -2.0%. Commodities were up, Gold and Iron Ore gained while Silver was the most notable gain of 1.7%. To the data, and critical to AUD's short-medium term movement will be the RBA's meeting on Tuesday and whether the central bank will follow others and start to signal a rate hike in 2022. There are also whispers swirling about a new QE announcement from the RBA at tomorrow's meeting, an addition that would no doubt send AUD lower. Today we have May’s Final Retail Sales data, figures expected to show similar result to the prelim release of 0.1% m/m.
USD
The AUDUSD posted significant gains over the weekend as we recovered 5 day's worth of losses, the pair traded as low as 0.7444 on Friday which was a fresh low for 2021, before rallying to trade at a rate of 0.7522 at the time of writing. US Equities were up, the S&P and Nasdaq both gained 0.8% while the Dow was up a modest 0.4%. The employment data on Friday evening showed the US economy added 850k jobs in June, up from 583k and better than expectations of 720k. The unemployment rate however unexpectedly moved up to 5.9% from 5.8% against expectations of a decline to 5.6%, a fact made worse by a steady participation rate at 61.6% compared to expectations of an increase to 61.7%. No other noteworthy data today given the Bank Holiday in the US. The RBA will be in focus for traders tomorrow.
EUR
The AUDEUR showed modest gains over the weekend, coming in to trade at a rate of 0.6342 at the time of writing. The major currency pair benefited from the US employment report and not to forget comments from the ECB President Lagarde who said on Friday that the Eurozone economy is beginning to rebound from the pandemic-induced slump but the recovery remains fragile. Eurozone Equities had little reaction; CAC had no movement while the DAX had modest gains of 0.3%. It’s a data filled evening today with the Eurozone Final Services PMI’s due.
GBP
The AUDGBP pair followed suit as we trade at a gain this morning, currently trading at 0.5437 at the time of writing. BOE Gov Bailey said on Friday it was important not to over-react to a rise in inflation that was likely to prove temporary during Britain's economic recovery from the COVID-19 crisis. Rising covid cases have been altering the path of the pound appreciation this comes after consistent Delta strain cases reported in the UK, with more than 26,000 cases reported on the 30th of June, the highest total since January. There is little in the way of data this week with the only note-worthy mention being the UK’s final services PMI due this evening.
NZD
The AUDNZD pair bucked the trend as we trade at a loss over the weekend, the pair currently at 1.0702 at the time of writing. The Kiwi cheered risk-on mood as we dropped to a new monthly low, both antipodeans have come under recent pressure given the RBA vs RBNZ trajectory coupled with the political tension between Australia and China which weighs on the Australian Commodity performance. No-noteworthy data releases for NZ today with the RBA in focus tomorrow.