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.