The Australian dollar is higher after the latest US jobs report whiffed

Photo by Ronald Martinez/Getty Images

The Australian dollar has opened the new trading week above 74 US cents, holding onto most of the gains achieved on Friday evening.

Here’s the Aussie dollar scoreboard as at 7.50am AEST.

AUD/USD 0.7426 , -0.0015 , -0.20%
AUD/JPY 82.07 , 0.27 , 0.33%
AUD/CNH 5.0322 , 0.0061 , 0.12%
AUD/EUR 0.6585 , 0.0005 , 0.08%
AUD/GBP 0.5770 , -0.0002 , -0.03%
AUD/NZD 1.0403 , -0.0005 , -0.05%

Elias Haddad, senior currency strategist at the Commonwealth Bank, says the Aussie’s latest uplift was driven by a weaker-than-expected US jobs report for May.

“USD and US 10-year Treasury yields fell to new cyclical lows during Friday’s overnight session following the disappointing US non-farm payrolls report,” he said.

“In May, US non-farm payrolls rose less than expected and the previous month’s increase was revised lower to 174,000. The unemployment rate dipped 0.1% to 4.3% but that was largely because of a lower participation rate which fell 0.2% to 62.7%.”

Along with payrolls growth which undershot expectations, Haddad said that average hourly wage growth also missed, rising 2.5% from a year earlier.

That figure was unchanged from April and missed the 2.6% level expected.

It also raised questions over the outlook for US inflationary pressures given wages are failing to lift in any meaningful way despite tight labour market conditions.

As a result, the yield on benchmark US 10-year note tumbled to as low as 2.14% while the US dollar index slumped to 96.654. Both marked lows not seen since the US presidential election.

It also helped the boost the Aussie dollar, along with assistance from rebounding iron ore prices.

AUD/USD 5-Minute Chart

Turning to Monday trade in Asia, there’s a plethora of data releases scheduled both in Australia and abroad, including further inputs into Australian Q1 GDP which will be released on Wednesday.

Today, the ABS will release company profits and non-farm inventories data which will feed into the income and expenditure measures of GDP in two days time.

The former is expected to lift 5%, the latter 0.5%. Both will be released at 11.30am AEST.

Outside of Australia’s GDP inputs, markets will also receive the latest Melbourne Institute inflation gauge, Ai Group Performance of Services Indicator (PSI) and ANZ job ads for May.

Elsewhere, services PMI reports will also be released in China, Europe and UK.

There’s also a raft of economic data released in the US with two services PMI reports, factory orders and revised durable goods orders and labour costs and productivity figures all arriving during the session.

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