It'll be a slow start to yet another busy week for Aussie dollar traders

Richard Martin/POOL/Getty Images
  • The Australian dollar has opened the new week slightly softer.
  • Chinese monetary growth data released over the weekend undershot market expectations.
  • The British pound is softer ahead of key Brexit votes.
  • US Fed Chair Jerome Powell will be speaking during the Asian session today. The main data event will be the release of US January retail sales.

The Australian dollar has opened the new week under modest selling pressure, giving back some of the gains achieved on Friday.

Here’s the scoreboard at 8am in Sydney on Monday.

AUD/USD 0.7033 , -0.0012 , -0.17%
AUD/JPY 78.1 , -0.07 , -0.09%
AUD/CNH 4.7334 , -0.0009 , -0.02%
AUD/EUR 0.6261 , 0.0002 , 0.03%
AUD/GBP 0.5421 , 0.0018 , 0.33%
AUD/NZD 1.0350 , 0.0003 , 0.03%
AUD/CAD 0.9452 , -0.0003 , -0.03%

Having closed at .7045 on Friday, the AUD/USD currently trades at .7033, weighed down by the release of softer-than-expected Chinese monetary growth figures for February released over the weekend.

The early decline has seen the AUD/USD give back much of gains from Friday, something that was sparked by a big slowdown in US jobs growth in February.

US non-farm payrolls grew by just 20,000 last month, well below the 180,000 increase expected. Helping to limit the Aussie’s gains against the greenback, the US unemployment rate tumbled to 3.8% while average hourly earnings grew at the fastest year-ended pace since the GFC.

While the latter two figures are arguably more important when it comes to the outlook for monetary policy settings from the US Federal Reserve, it was the payrolls figure that markets chose to focus on.

That was despite clear evidence that weather likely contributed to the February result.

“The [payrolls] number needed to be seen in context of an exceptional January print — revised up to 311,000 and weather-related hits to the likes of the construction sector,” said Ray Attrill, Head of FX Strategy at the National Australia Bank.

“We should also note that at 186,000, the three-month average [for payrolls growth] is still more than enough to keep downward pressure on the unemployment rate.”

Investing.comAUD/USD Hourly Chart

While the soft Chinese monetary growth report for February has seen the Aussie dollar fall against most of the major crosses in early trade on Monday morning, it has managed to gain against the British pound as uncertainty before a series of key Brexit votes this week begins to build.

“The voting process could involve three votes held over three consecutive days, depending on the outcome of each day’s vote,” said Joseph Capurso, Senior Currency Strategist at the Commonwealth Bank.

“The House of Commons will vote on Tuesday 12 March on the current (or modified) Withdrawal Agreement (WA) and a framework for a future relationship with the EU.

“If the House of Commons rejects the Brexit deal, then on Wednesday 13 March the House of Commons will vote on whether to leave the EU without a deal, known as a ‘hard Brexit’.

“If a hard Brexit is rejected, the House of Commons will vote on Thursday 14 March for an extension to the Article 50 deadline of 29 March.”

Given the level of uncertainty, and expectations the vote on the withdrawal agreement will lose by a large margin, according to UK press reports, it’s little wonder the British pound is weaker in early Asia trade.

While Brexit looks set to dominate affairs later in the week, the focus today will be on a television appearance from US Fed Chair Jerome Powell at 10am AEDT.

Outside of Powell’s pow-wow on 60 Minutes, the economic calendar elsewhere is quiet in Asia, leaving headlines and technicals to dictate broader direction.

New Zealand electronic retail spending and Japanese machine tool orders data are the headline acts. Yes, it’s that quiet.

In the absence of some market-moving remarks from Powell, the performance from Chinese markets will likely prove to be influential on the movements in the Aussie dollar.

Later in the session, the main data highlights will be German industrial production and trade along with retail sales and business inventories data from the United States.

The retail report will attract the most attention. Thew headline change in sales is expected to be flat while the so-called “control” group reading is tipped to increase by 0.6% from December. The latter reading closely aligns with household consumption in US GDP.

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