AUD – Australian Dollar
The Australian dollar rose on Friday as US jobs data missed market expectations. Although the US non-farm payrolls report saw the unemployment rate fall to 5.8%, the participation rate was lower and only 559k jobs were created versus an expected 675k. Markets immediately repriced the likelihood of the Federal Reserve tapering their quantitative easing program sooner than originally planned which sent the US dollar and bond yields sharply lower.
This US dollar selloff allowed the Australian dollar to rise from 0.7660 to 0.7745 throughout trade. Although the NZD also performed strongly, rising from 0.7150 to 0.7216, the AUD/NZD cross edged higher to reach 1.0750.
Looking to the day ahead, it’s a public holiday across the pond in New Zealand for the Queens Birthday long weekend but we have ANZ job numbers to start out the week which should give us some insight into how the domestic labour market is tracking. Offshore releases will be watched closely, especially Chinese trade balance data and an update on foreign reserves for the month of May which have the potential to move the Australian dollar should we see any surprises.
As we touched on above, the main story for markets on Friday was the US jobs data-led fall in the USD and bond yields. Further to this, we did get some fed speak from FOMC member Mester who reiterated his stance that rate setters should be patient with their policy stance until there is sufficient evidence the labour market has made more progress. He noted that he viewed the employment report as ‘solid’ but needed to see further progress before tapering of quantitative easing could be considered.
In rates markets the US 10 year treasury yield fell sharply from 1.63% back down to 1.55% as rate expectations were repriced. The EUR rose slightly to trade just under the 1.22 level whilst the JPY also rose, pushing the USD/JPY below 110.
AUD/USD: 0.7640 – 0.7800 ▲
AUD/EUR: 0.6300 – 0.6415 ▲
GBP/AUD: 1.8200– 1.8450 ▼
AUD/NZD: 1.0700 – 1.0800 ▲
AUD/CAD: 0.9290 – 0.9400 ▲