The Australian dollar was already pumped up by the hawkish Fed meeting overnight, jumping back above the 71 handle against USD and nearly clearing the former weekly high at the 71.80 level. This mornings job numberwang print has seen it nearly clear that level, setting up for a potential breakout:
Although RBA Chairman Lowe is sitting on his hands still, where he recently stated the bank “is in no hurry to increase rates” unlike the minimum three or even possibly six rate hikes slated by the Fed for 2022.
He further said in a speech this morning that there are no real risks on the horizon apart from Omicron, with spending robust as the bank looks to wind down its $350 billion bond-buying program from February through to May next year.
“The Omicron outbreak does, though, represent a downside risk and it is difficult to know how things will develop from here,” he said.
“But we do expect the positive momentum in the economy to be maintained through the summer, underpinned by the opening up of the economy, the high rates of vaccination, significant fiscal and monetary support, and the strengthening of household and business balance sheets over the past year or so.”
A currency cross to keep an eye on is AUDNZD with the Kiwi under pressure as its economy doesn’t look as robust as the local version, with the latest GDP print seeing a deep dive going into the final quarter of the year, with 2022 not looking rosy:
The Aussie is about to pip the October highs through the 1.06 handle with any further good local news reinforcing the split.