Australian dollar zooms higher on soft US jobs

See the latest Australian dollar analysis here:

Macro Afternoon

by Chris Becker

Friday night’s US NFP (non-farm payroll) unemployment print for December reset the strong USD meme that had been in place since the New Year with the King of currencies falling back on lower risk expectations. While the headline unemployment rate remains flat at 3.5%:

The monthly numbers were well below expectations and the lowest since May, with a big downward revision from last month. It’s pretty obvious that the last two quarters of job growth has stalled out

USD buyers switched to other safe haven assets like gold and Yen, as a result, the Australian dollar zoomed higher:

Note how the Pacific Peso has bounced off its recent lows, with this morning’s classic gap higher catching up to weekend trading, but it was all about Friday night as it pips through the 69 handle. There is limited upside here however, if you look at the AUDNZD cross where resistance overheard at 1.0450 and the lack of momentum explains trader’s reticence to bid the Aussie too high before the long awaited February RBA meeting:

Expectations of a rate cut remain high, currently at 60% probability. Also note the direction of gold in AUD which has been unable to breakthrough the historic high despite gold in USD gaining on Friday night:

The average range of the Australian dollar can exceed 200 pips within a month, so don’t get too confused if the Aussie decides to head up towards 70 cents during this new reset of USD risk before the next NFP print in early February.

Comments

  1. AUD going up?

    Better cut teh rates!

    Or we could do something that actually works like regulate/restrict unproductive capital inflows AND encourage productive capital outflows.

    But that would upset the free market obsessives and we cannot have that !

      • Too right – the War Lobby needs to tool up for their new Middle Eastern frolic “Episode 456 – Helping peace loving rebels bring democracy to Iran”

        • Was sarc [/s], reference to a JG which would sort a lot of that unwanted and unwarranted capital flows – especially now the whole job creator meme is burnt ash in a hole in the ground.

          But yeah did you see Trumps little fireside chat on the weekend, with his hand picked Generalissimos, banging on about spending 2T+ plus on his new military, bigger, stronger, faster, et al than anyone else in the world …. [echos of forever~~~~]. Lead in your drinking water you say … go bootstrap yourself … just look at your ugly city and its ugly people … ohhh cabana boy I need a hot towel to wash all this dirt and stink off me now …

          • Ahh, too cryptic for me.

            Yes, have been watching the circus. According to the deep thinkers in the OpEd columns at Murdoch’s masthead Trump has a plan that is very Swamp-free. I almost chortled.

      • Quite so. Though I have found the “Quiet Australians” at the Oz struggle with the “productive” theme. They consider referring to productive investment somehow sneaky and fighting dirty.

        • Jumping jack flash

          Infinite debt is obviously productive because debt is now wealth through the diabolical mechanism of property capital gains. Created, secured, and paid for by infinitely expanding debt.

          • Consumer debt is unproductive, waiting for the elites to spill some crumbs off the table is randomness, so that leaves the state, tho some would rather deploy force in the latter case.

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