Surging US Jobs Report Surprises Markets
AUD
The Aussie Dollar kicks off the day lower against all majors bar the NZD as souring global risk sentiment weighs on the currency. Asian equities followed on from the strong Wall St. session on Friday with the Nikkei +1.8%, Hang Seng +1.3% and the ASX 200 +0.6%. With little in the way of economic data and with mainland China still on their Golden Week holiday, FX moves were very muted during the Asian session with the majority of major pairs trading in tight ranges. The Westpac Consumer Sentiment report will be released later this morning, as well as NAB Business Confidence, ANZ Job Advertisements and the RBA Monetary Policy Meeting Minutes which will provide insight in the central bank’s frame of mind at the most recent meeting. RBA Deputy Governor Hauser will also be speaking at Midday.
USD
Friday’s surging US jobs report has unwound the past 3 weeks of AUDUSD gains, with the pair opening today at 0.6753. The report was incredibly strong on every front possible – job creation, unemployment, wages and hours worked. The Unemployment Rate unexpectedly fell to 4.1% while the number of jobs added in September rose to 254k, exceeding expectations of 147k. The hot data finalised what was the strongest week of gains for the USD in over 2 years. Overall, while the inflation backdrop is allowing the Federal Reserve to start moving monetary policy back to neutral, the latest employment figures provide no case for another 50bps cut from the Fed, with markets largely opting for a quarter-point cut at the next meeting. Risk sentiment soured last night which saw the Nasdaq close -1.2%, the Dow Jones -1%, and the S&P 500 -.9%. A few FOMC Members will be speaking this evening. The major USD event this week will be Consumer Price Inflation (CPI) figures, late Thursday evening.
EUR
AUDEUR has fallen by more than 0.7% over the past 24h as global risk sentiment soured, seeing the pair kick off the day at 0.6151. The DAX fell -0.1% yesterday, while the CAC gained +0.5%. Yesterday’s Retail Sales figures showed the volume of retail trade gaining +0.2% month-on-month in the Eurozone (Up +0.8% year-on-year) with the main contributors being food, drinks and tobacco. We’ll only see low tier Euro data this week. This afternoon will bring German Industrial Production m/m. Thursday evening will also bring the European Central Bank Monetary Policy Meeting Accounts.
GBP
AUDGBP reached near-3-month highs of 0.5227 last Thursday when Bank of England Governor Bailey revealed rates could be cut ‘more aggressively’ if needed. Since then, the Pound has retraced and the AUD has weakened off escalated tension in the Middle East. The pair open today at 0.5158. The FTSE gained +0.3% yesterday. We’ve got a quiet few days ahead in terms of UK data. On Thursday, the Bank of England’s Monetary Policy Report may create volatility ahead of Friday’s data dump, with the key release being August GDP figures.
NZD
AUDNZD furthered steady gains over the back half of last week, reaching 7-week highs of 1.1053 last night before retreating a tad to this morning’s open at 1.1018. being about flat relative to Friday morning. It’s a big week ahead for the Kiwis given the Reserve Bank or New Zealand key interest rate decision on Wednesday. The inflation rate in New Zealand has been steadily decreasing and is now approaching the RBNZ’s target range of 1-3% p.a. The central bank is widely expected to follow the US Federal Reserve and deliver a half-point cut as price pressure are at their lowest level in nearly four years, although a 25bps cut can’t be ruled out.