The Australian dollar is continuing to defy gravity

Photo by NASA via Getty Images

Despite another bumper US jobs report for November and steep decline in the iron ore price, the Australian dollar has opened the week above the 73 cent level.

As at 8.30am AEDT, the AUD/USD currently buys .7337, fractionally below Friday’s opening level of .7342 but well above the .7191 the Aussie was trading at just one week ago.

Last week’s substantial rally, coming despite continued pressure on Australia’s key commodity prices and US data that all but confirmed US interest rates will likely be raised for the for the first time since June 2006 in less than two week’s time, has many analysts questioning whether the Aussie will continue to defy gravity.

Elias Haddad, director of currency and international economics at the CBA, expects that it will be a volatile period for the Aussie this week, stating in his Monday morning note that risks are skewed to the downside in his opinion.

“AUD will likely have a volatile week with a bias to the downside versus the USD and EUR,” he wrote.

“In Australia the focal point is on the November employment report. CBA economists expect Australia’s economy to lose 10,000 jobs in November after strong gains the previous month and the unemployment rate to lift 0.1% to 6.0%. Meanwhile, we expect China’s November economic activity data set to disappoint this week. Leading indicators point to further contraction in Chinese exports. Also, Chinese retail sales, industrial production and investment will likely slow in November.”

Before those events arrive later in the week – starting with the Chinese trade figures on Tuesday – markets will have second-tier Australian data to contend with today with the release of the ANZ job ads series (11.30am AEDT) along with the latest AIG-HIA performance of construction index for November at 9.30am AEDT. While neither is likely to create a significant market reaction, there will be plenty of interest in the job ads data given its regard as a forward-looking economic indicator for future labour market conditions.

Here’s the current Aussie dollar scoreboard.

  • AUD/USD 0.7337 , -0.0002 , -0.03%
  • AUD/JPY 90.38 , 0.04 , 0.04%
  • AUD/CNY 4.6963 , 0.0007 , 0.01%
  • AUD/EUR 0.6750 , 0.0014 , 0.21%
  • AUD/GBP 0.4855 , 0.0002 , 0.04%
  • AUD/NZD 1.0881 , 0.0016 , 0.15%

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