Aussie gains on surprise drop in unemployment rate

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forex australia_RBA

Today’s Economic events

  • Australia employment change 0.3k vs. 11.6k
  • Australia Unemployment rate 5.80% vs. 6.0%
  • BoJ Gov. Kuroda speech
  • Switzerland PPI m/m -0.60% vs. 0.20%
  • SNB LIBOR rate -0.75% vs. -0.75%
  • Eurozone final CPI y/y -0.20% vs. -0.10%; core CPI y/y 0.80% vs. 0.70%
  • BoE leaves interest rates unchanged
  • MPC votes 0 – 9
  • Canada wholesale sales m/m 0.00% vs. 0.30%
  • US Philly Fed manufacturing index 12.4 vs. -1.4
  • US weekly unemployment claims 265k vs. 267k

Following yesterday’s FOMC meeting where interest rates were left unchanged and the dovish tone in the Fed, the US Dollar weakened across the board. The Yen and the commodity risk currencies gained into yesterday’s close. The Asian markets opened today with the Nikkei225 falling -0.22% while the Shanghai composite gained 1.22%. USDJPY is down -0.83% for the day but not before posting session lows to 110.76. At the time of writing, USDJPY recovered strongly trading at 111.75.

AUDUSD posted a 7-month high today testing session highs above 0.7645 before easing back lower. At the time of writing, AUDUSD was up 0.57%. The gains came as the Australian unemployment rate fell to 5.80% against forecasts of 6.0%. The monthly employment change, however, remained weak but highlighted the volatility in the Australian labor market.

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NZDUSD is up 0.80% led by a weaker dollar. Yesterday, after the FOMC release, New Zealand quarterly GDP numbers showed a surprise 0.90% increase, beating forecasts of 0.70%, keeping the Kiwi well supported. NZDUSD is currently trading at $0.6811.

In Europe, the Euro continued to post gains against the Dollar. EURUSD gained 0.74% for the day as prices tested highs above 1.13 before retreating lower. Eurozone inflation data was mixed with the headline CPI falling more than expected to -0.20% while the core CPI increased modestly by 0.80%, above expectations of 0.70%.

The Swiss National Bank’s quarterly monetary policy assessment saw the benchmark 3-month LIBOR rate staying unchanged at -0.75%. However, the SNB’s policy statement continued to reflect on the Swiss Franc being overvalued. Switzerland producer prices index released earlier fell -0.60% below forecasts of 0.20%. While EURCHF was muted, USDCHF fell sharply losing -0.96% at the time of writing, currently trading at 0.968.

The Bank of England’s monetary policy meeting saw rates being unchanged at 0.50% and the MPC vote count for rates was unanimous with 0 – 9. The GBPUSD surged on the news, gaining 1.09% for the day, trading near a four-day high of 1.441.

European equity markets were all trading lower with the German DAX down -1.68% while the London FTSE100 was lower by -0.39% at the time of writing.

The NY session opened with the US weekly jobless claims rising 265k, less than the expected 267k. US Philly Fed manufacturing Index also came out with gains, rising 12.4 against forecasts of a decline to -1.4. US Dollar was seen pulling back on the positive data. In Canada, wholesale sales for the month of January remained unchanged at 0.00% against expectations of an increase of 0.10%. USDCAD is down -0.80%, muted to the data.

On the commodities front, Crude Oil prices posted strong gains yesterday with weaker US Dollar and slowing pace of inventory buildup. Crude Oil futures for April delivery continued their gains currently up 1.32% trading at $39.04. Gold prices are also higher, regaining the $1250 handle yesterday. The precious metal is currently trading at $1265 an ounce with 0.20% gains. US futures markets are pointing to a weaker close with Dow Jones down -0.20% and the S&P500 down -0.22% ahead of the opening bell. Equity markets closed modestly higher yesterday after the Fed’s meeting.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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