The Australian dollar continues to fall

SHAMSHAHRIN SHAMSUDIN / AFP / Getty Images

The Australian dollar is still falling, adding to the large losses seen on Friday.

Here’s the scoreboard as at 7.30am AEDT.

AUD/USD 0.7911 , -0.0009 , -0.11%
AUD/JPY 87.12 , -0.20 , -0.23%
AUD/CNH 4.9933 , -0.0106 , -0.21%
AUD/EUR 0.6359 , -0.0002 , -0.03%
AUD/GBP 0.5607 , -0.0005 , -0.09%
AUD/NZD 1.0844 , -0.0012 , -0.11%
AUD/CAD 0.9828 , -0.0011 , -0.11%

After closing Friday’s session nursing a loss of 1.5%, the largest since May last year, the AUD/USD has continued to slide upon the resumption of trade on Monday morning, currently sitting at .7911.

Ray Attrill, Head of FX Strategy at the National Australia Bank (NAB), says the move is being driven by a spike in US bond yields following the release of another strong US jobs report on Friday.

“The jump in US annual average hourly earnings in January, to 2.9% from an upwards revised 2.7% in December, stole the limelight on Friday albeit there were a number of extenuating circumstances suggesting the number shouldn’t be taken completely at face value,” he said in his morning note.

“Together with a 200,000 headline non-farm payrolls print and unchanged 4.1% unemployment rate, the data served to ratchet up US 10-year Treasury yields [2.84%], the latter freaking out stocks.”

Along with “freaking out stocks”, Attrill said the Australian dollar — often regarded as a proxy for investor sentiment — was also hammered lower.

“The higher yields/risk negative tone propelled an across-the board extension of a nascent early-week USD recovery, led by more AUD weakness.

“AUD/USD ended the week 2.3% lower at 0.7920, half a percent more than any other G10 currency.”

The weekly decline was the largest in percentage terms since November 2016.

AUD/USD Daily Chart

Turning to the session ahead, it looks set to be an ugly one for Asia as it plays catch-up to the moves seen in Europe and North America on Friday.

Sentiment, rather than data, will continue to dictate direction with the economic calendar slowing down temporarily after a hectic end to the week.

In Australia, markets will receive the latest reading on service sector activity levels with the release of the Ai Group’s January PSI at 9.30am AEDT. That will be followed two hours later by ANZ Bank’s monthly job ads survey, also for January.

Regionally, most interest will be on services PMI readings from China, Japan and India that will be released during the session.

It’s safe to say more than a few eyes will also be directed towards the Superbowl that will be run and won over a large chunk of the Asian session.

The services PMI deluge will dominate the latter parts of trade with reports from the US, Europe and UK all scheduled for release. Elsewhere, Eurozone retail sales and investor confidence figures will also arrive during the session.

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