Bell FX Currency Outlook: The Australian Dollar retreated from its recent highs on Friday night after the June US non-farm payrolls came in lower than expected with 80,000 new jobs created versus the 100,000 generally predicted.
The markets feel the nervousness surrounding the Spanish situation could well see the AUD test support levels on the downside today. Support at USD1.0380 has yielded so there may be a push lower.
Australia: After trading above USD1.0300 on Friday the AUD has dipped below USD1.0200 as the US jobs numbers disappointed investors and equity markets alike. This in turn affected the commodity currencies such as the AUD as all commodities were generally weaker on the day. The numbers were not bad enough to spark more talk of QE3 although this still remains a possibility but most likely at least several months away.
The slightly better news was that 84,000 private jobs were created last month and the May job numbers were revised upward to 77,000 from the original 69,000 reported. The unemployment rate remained at 8.2%. The average work week in the US increased for the first time since February.
Major equity indices were generally all higher for the week although some of the gains were reduced on Friday where both the US
Dow and S&P500 fell by almost 1%. In line with the "risk off" sentiment oil fell to below US$85 a barrel (WTI) and gold traded below US$1,600 finishing at US$1,584 an ounce.
This week will see the release of a slew of data from China beginning today with CPI figures followed by trade data tomorrow and industrial production, retail sales and the Q2 GDP figures on Friday where a 7.5% pa growth figure is expected.
Majors: Europe will continue in the short run to be the focus of the market with a Eurogroup meeting of finance ministers starting later today. This meeting will be the first to discuss the structure of the new single banking authority for the Eurozone which was agreed to at the Brussels summit earlier this month.
There is lots of work to do on this issue and the timing of the recapitalisation of Spanish banks agreed to last week. European equity markets were all softer on Friday as well with the Spanish Ibex 35 falling by over 3% and Spanish government bond yields again are trading above the 7% yield, a level considered unsustainable by some analysts.
The USD gained against the EUR which fell to USD1.2260, its lowest level against the USD since July, 2010. This has sent the AUDEUR to its highest levels ever since the EUR was created in 1999. After the intervention by the central banks of Europe, England and China on Thursday night last week, we expect the Bank of Japan to announce some form stimulus when they meet on Thursday.
9 JULY AU ANZ Job Advertisements JUN
CH CPI JUN
GE Imports / Exports MAY
US Consumer Credit MAY
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