US Unemployment takes centre stage

March 8, 2018

Finport Currency Brief - Courtesy of Compass Global Markets.

 

Good morning all;

AUDUSD: AUDUSD: The last week has been rather flat, despite the batch of major domestic data and the Reserve Bank meeting. The local currency has held my previously forecast 0.7750 support, however just managed to squeeze out a small 50 point gain to trade at 0.78c as the market awaits any further fall out from US president Trump’s protectionist tariff rumblings as well as tonight’s US Unemployment Rate and US Non-Farm Employment Change data. News that the Trade Balance numbers from Australia and China drastically improve, whilst the US Trade Deficit blew out to a 9 year high barely caused a ripple in the currency market - illustrating the importance of tonight’s numbers. Should the rate print at 4% and employment change come in above 200,000 for a second consecutive month respectively, indeed a 4th month out of 5, then we can say for complete certainty that the US Federal Reserve are to hike interest rates later this month and potentially move again sooner than many had thought. Any disappointment and the US$ could well be sold off quite sharply. As it is I am still in the camp of an overall weaker US$, seeing a much greater chance of 0.80c than 0.75c as our next stop.

 

AUDEUR: This pair has virtually flat lined, trading either side of 0.63c whilst the world focues on the US. News that Merkel found some friends and the Italians have edged further right was of interest but the currency market didn't bat an eyelid. The European Central bank met overnight and said any monetary policy normalisation would be very gradual, which means a continuation of Euro's being pumped into the system and interest rates left on hold at 0.00%. Therefore with no major data for either currency we'd expect a slow long rind higher from these relatively lower levels.

 

AUDGBP: This pair has traded with a bit more volatlity as the UK political situation is seen as the more precarious. What UK data there was came in as expected so we continue to sit back and watch PM May continue to fight for her life and dig the UK out of this mess. Those buying or selling should be happy with their side of 0.56p

 

Jim Devonport

E: jim.devonport@finport.com

M: 0415 066 468 


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