Jobs Data to Define Aussie Dollar's Next Move

The Australian dollar continued to buck the trend overnight, forging gains against major counterparts despite moderate downside across risk barometers. The Aussie outpaced its commodity counterparts the CAD and Kiwi, which succumbed to negative sentiment from both European and U.S equities. The local unit also built on gains against the Euro with the EURAUD pair breaking the downside of 1.26 to weekly lows of A$1.2560.

US corporate earnings remained a negative distraction as expectations build third-quarter earnings will show a material decline from the second-quarter. The Fed's Beige Book which is an anecdotal view of economic activity in 12 districts showed the economic continue to expand at a "modest" pace, with housing and auto sales showing moderate improvement. The S&P500 and DOW close lower 0.62 and 0.95 percent respectively.

After falling to weekly lows of $US1.2835 earlier, the Euro resumed a slow grind higher but failed to make a break to the upside of $US1.29-figure with a ratings downgrade from Standard and Poor's removing some of its sheen. This morning ratings firm S&P downgraded Spanish debt to one notch above 'junk' status from BBB+ to BBB- and placed Spain on negative watch, citing "mounting risks to Spain's public finances, due to rising economic and political pressures."

This morning will see the release of the September jobs data take centre stage which is expected to show a net gain of 5,000 new jobs. Despite a net loss of 8,800 jobs in August, the official jobless rate edged lower from 5.2 to 5.1 percent, this fall is expected to be unwound with estimates showing the rate probably increased to 5.3 percent. It's clear markets will be watching today's release in the context of the Novembers RBA policy decision, with a less-than-inspiring print likely to fuel expectations Stevens and Co will slice a further 25bps from the official cash rate. On the flip side, markets may have been quick to pencil in a November rate cut, but there's little to suggest the RBA will begin an aggressive period of easing with the recent policy statement noting the board considered it appropriate for the policy to be "a little more accommodative." A better-than-expected result today will see rate cut expectations pared back, in turn, giving the Aussie dollar further impetus to grind higher. At the time of writing the Australian dollar is buying 102.15 US cents.