AUD looks to jobs for inspiration
By Chris Gore | January 17, 2013 9:59 AM EST
Aussie dollar looks to jobs for inspiration
The Australian dollar traded in a reasonably tight range overnight with price action largely adhering to U.S equity moves. The next key directive for the local unit is today's jobs report, which is expected to show the Australian economy added 4,500 new jobs in December with the unemployment rate likely to have risen from 5.2 to 5.4 percent. We've seen a reluctance to break the upside of 105.8 and 106 US cents, and any significant deviation to the upside of estimates today will no doubt see these levels put to the test once again while set the inflection point needed for further gains. While a net 4,500 new jobs is conservative, it still may be a tad ambitious if we consider recent precursors such as the ANZ job ads earlier this week. To explore the downside we can see the 105.25/3 level is key, with a move below likely to encourage further downside momentum.
Markets are also gearing up for a series of economic reports from China, with GDP Industrial production, fixed asset investment and retail sales on tomorrow's agenda.
At the time of writing the dollar is buying 105.7 US cents.
A hybrid of themes guided US equities overnight with corporate earnings and debt ceiling concerns remaining prominent directives. Risk trends appeared to err on the side of caution with the greenback moderately higher against major counterparts, but there remained little conviction to spur any meaningful moves and high beta currencies such as the Aussie and Kiwi remained bid. Corporate earnings that beat estimates from banking heavyweight Goldman Sachs beat estimates, while JP Morgan's were largely in line with expectations.
Data released overnight showed U.S consumer prices were flat in December with the annual rate of inflation at 1.7 percent from a previous and expected 1.8 percent. Excluding the volatile food and energy components of the index, inflation grew at a yearly pace of 1.9 percent. Subdued inflation pressures is supportive the view the Fed will remain on the interest rate side lines for longer, with their threshold of 2.5 percent nowhere in sight.
Industrial production rose 0.3 percent in December, in line with estimates but down from 1-percent in December, while manufacturing production beat expectations with a 0.8 percent jump.
True to form, 'modest' appears to be the adjective of choice to describe U.S economic growth according to the Fed's Beige Book. The report which is anecdotal report of economic conditions in 12 U.S districts continued to show only moderate improvement last month with auto sales and housing a bright spot, but most importantly little progress was seen in labor market conditions.
Across the Atlantic, Euro-Zone Consumer prices rose 0.4 percent in December to represent 2.2 percent growth in annual terms. Core prices rose 1.5 percent on year. Both gauges were in line with consensus estimates.
The Euro continued to ease across the board after last week's solid performance, with the EURUSD pair falling below the $US1.33, while losing recent momentum seen against the Swiss franc.
It would appear markets have taken heed to a little jawboning from Eurogroup President and Luxembourg Prime Minister Jean-Claude Juncker, who said the Euro is "dangerously high." Euro price action - in part - is reflecting relative stability in the region after an extended period of disorder across the periphery, and while this may appear positive, the repercussions of a stronger currency may hamper the export competitiveness of Europe's largest economy, Germany. The fear of being caught short appears to have taken precedence over the fear of further disorder in the region and it's apparent we're seeing dissolution of Euro short positioning which plagued markets intermittently throughout 2012.
At the time of writing the Euro is buying $US1.3290.
Most Popular Slideshows
- Pope Francis Meets Sudanese Woman Who Was Spared Death for Apostasy (PHOTOS)
- Malaysia Airlines Flight MH17: King Williem-Alexander, Queen Maxima Hold Solemn Reception Ceremony for Victims
- Transfer News: FC Barcelona Shockingly Sign Valencia Defender [PHOTOS]
- Jennifer Lawrence & Nicholas Hoult Allegedly Split: Mad Max Actor Cheats with Kristen Stewart & Riley Keough - Reports
Join the Conversation
- 5 Uncanny Jobs That Actually Pay Very Well
- Malaysia Airlines MH17: Multi-Million Pound Law Suit Looms Over Putin’s Head, Assets At Risk
- Malaysia Airlines MH17: Russian International Condemnation Extends to 2018 World Cup
- Magaluf 2014 Update: Spanish Bar Where Teen Performed Sex Acts Closed, to Pay $78K Fine Along with Carnage Event Planner (VIDEOS)
- Advisory: Britons Told to Leave Libya ASAP, UK Issues Travel Ban
- Apple iPhone 6 on Two Confirmed Release Dates, New Parts Leaked Suggesting Bigger iPhone to Come
- Nexus 5 and Nexus 7 Android 5.0 L Material Design Coming with More Interface Changes
- Xiaomi Mi4 vs OnePlusOne vs Nexus 5: Mi4 is the ‘Perfect’ Phone
- Israeli Women Stripping Naked for IDF Soldiers
- Samsung Galaxy S4 LTE-A Android 4.4.2 KitKat Update Rolls Out: When to Hit Your Region
- HTC One M8 Android 4.4.3 KitKat Update Roll Out, Introducing the HTC One Remix
- OnePlus One Android 4.4.4 KitKat and Android L Update Guide