USD Strengthens After Strong Employment Data

AUD

The Aussie dollar continues its downward trajectory to open lower against the majors. Asian equites reflect the general risk sentiment, closing in the red with ASX -1.3%, Shanghai Comp -0.9% and Nikkei -2.3%. Commodities were also mainly down with the exception of Natural Gas which gained 6.3%, while Crude Oil lost 2%, Gold -0.5%, Silver – 2.4%, Iron Ore -1.3% and Copper -1.7%. A quiet day for Asian data yesterday with nothing out of both Australia and China, however, today we see Australia’s Trade Balance which is anticipated to fall from 11.7B to 10.87B. Out of China we will see the Caixin Services PMI which is also expected to drop from 53.9 to 52.5, both data sets not doing any favors for the AUD if predictions are met.

USD

The AUDUSD plummeted to 2-month lows overnight, losing over 75 pips to open this morning at 0.6542. Wall Street also felt the sting of sullying risk sentiment, closing in the red with Dow Jones -1%, S&P 500 -1.4% and NASDAQ -2.2%. Last night’s main event for the US was the ADP Non-Farm Employment Change release which came in well-above expectations of 191k at 324k, attributing to the steeper drop in the AUDUSD pair. Tonight, we will see more employment data in the form of Unemployment Change paired with Prelim Nonfarm Productivity q/q and Prelim Unit Labor Costs q/q. We will also see ISM Services PMI, which is expected to remain somewhat flat at 53.1.

EUR

The AUDEUR pair lost the 0.6000 handle and descended to 3-month lows, opening this morning at 0.5977. European Equities close in the red with the DAX -1.4% and CAC -1.3%. No important data out of the Eurozone yesterday, while today we'll see a slew of Services PMI’s along with German Trade Balance, French Gov Budget Balance and EU Economic Forecasts, which are all unlikely to move markets.

GBP

The AUDGDP also fell overnight, opening only slightly lower this morning at 0.5145. This could be short-lived as tonight we'll see Britain’s main event for the month in the form of the Bank of England's Interest Rate announcement. Policy makers are split on their views for the hike as there has been just enough “positive” data out over the past month for policymakers to return to a smaller 25bps increase (after June’s surprise 50bps hike). Markets have currently priced in a 25-basis point increase so anything contradictory is likely to heavily influence markets.

NZD

The AUDNZD opens slightly lower this morning at 1.0754 with Kiwi employment data failing to heavily impact the rate. New Zealand’s Employment Change q/q came in at +1.0%, being slightly better than the expected +0.6%. Adversely, their Unemployment Rate came in a little worse than expected at 3.6%. A quieter day today with only the release of ANZ Commodity Prices m/m.