Strong Australian Employment Gains Fail to Boost AUD Exchange Rates

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Headlines

  • ‘Aussie’ Weak despite Forecast-Beating Jobs Data – December marks historic year of jobs growth
  • AUD/GBP Flat despite ONS Consumer Spending Data – UK consumption back to pre-crisis levels
  • AUD/EUR Weakens on ECB Coeure Comments – Eurozone now in expansionary phase, ECB official claims
  • USD Slumps on Mixed Domestic Data – Rise in risk-appetite following strong Chinese figures also hammers US Dollar

Australian Dollar

The Australian Dollar didn’t particularly benefit from solid employment stats released yesterday morning, despite the rosy picture painted of the labour market. Employment increased by nearly 35,000 - over double the forecast - in December, marking the first time in the history of the Australian Bureau of Statistics data that employment has risen every single month in a calendar year. The unemployment rate did unexpectedly edge higher to 5.5%, but this was due to an unexpected increase in the participation rate.

Sterling

The Australian Dollar was kept at opening levels against the Pound yesterday, despite a lack of UK data to provide support for Sterling. Markets were cheered by the positive tone taken by French President Emmanuel Macron ahead of his summit with Theresa May. Macron said that France would always look kindly upon the UK should it change its mind and decide to abandon Brexit, or re-join the EU at a later date. Additionally, it was reported by the Office for National Statistics (ONS) that household spending had returned to levels last seen before the financial crisis.

AUD/GBP could experience upside pressure today as the UK’s December retail figures are expected to show declines of around -1% on the month.

Euro

The Euro was on strong form yesterday, benefiting from weakness in the US Dollar. Although jitters over the German coalition talks remain, after a leading official in the Social Democratic Party (SPD) claimed there was no plan B should coalition talks fail, the Euro was given a boost by comments from European Central Bank (ECB) official Benoit Coeure. The central banker stated that the Eurozone was no longer in a recovery phase, have instead moved to an expansionary phase.

There is nothing hugely impactful upon the Eurozone data calendar today, but the German producer price index figures for December and the Eurozone current account balance for November could create some jitters for the Euro.

US Dollar

Strong Chinese data and disappointing US eco-stats yesterday cooled demand for the US Dollar; the former improving risk appetite and the latter weighing on expectations of monetary tightening from the Federal Reserve this year. The number of new housing projects began in December suffered a shock -8.2% month-on-month drop to 1192K, against expectations of a -1.7% decline after November’s 3% growth. The Philadelphia Fed business outlook index dropped further than expected to 22.2 instead of to 25 and the number of continuing jobless claims rose much further than expected to 1952K instead of 1900K.

Canadian Dollar

The Canadian Dollar was still on gloomy form after yesterday’s early morning Bank of Canada (BOC) interest rate decision. Even though rates were hiked to 1.25%, the accompanying statement on monetary policy warned that the collapse of NAFTA could have serious consequences for the Canadian economy. Oil was weakening as well, while the Canadian ADP non-farm payroll report showed a decline of -7100 jobs in December.

Canadian manufacturing sales figures and international securities transactions data for November will be released late in the night and could create some early morning volatility for the Canadian Dollar on Saturday.

New Zealand Dollar

The New Zealand Dollar was on bullish form yesterday, boosted by the weakness of the US Dollar, Australian Dollar and Canadian Dollar. The day’s only data was the early morning REINZ house sales figures for December, which showed a -10.1% decline, but investors were not perturbed and NZD shot higher.

The Business NZ manufacturing PMI for December is set for release this morning.

Data Released

January 19th 07.30 NZD BusinessNZ Manufacturing PMI (DEC)
January 19th 19.00 EUR Eurozone Current Account s.a. (Euros) (NOV)
January 19th 19.30 GBP Retail Sales Ex Auto Fuel (MoM) (DEC) -1%
January 19th 23.30 CAD Manufacturing Sales (MoM) (NOV) 2%

Post by TorFX

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