The Australian dollar is lower after North Korea's latest nuclear test

Photo by Chung Sung-Jun/Getty Images

The Australian dollar has opened the new trading week slightly lower, giving back some of Friday’s gains in the wake of North Korea’s latest nuclear test on Sunday.

Here’s the scoreboard as at 7.55am AEST.

AUD/USD 0.7947 , -0.002 , -0.25%
AUD/JPY 87.14 , 0.38 , 0.44%
AUD/CNH 5.2136 , 0.0092 , 0.18%
AUD/EUR 0.6689 , -0.0001 , -0.01%
AUD/GBP 0.6131 , 0.0011 , 0.18%
AUD/NZD 1.1099 , 0.0009 , 0.08%
AUD/CAD 0.986 , -0.0015 , -0.15%

The AUD/USD currently buys .7947, down 0.25% from Friday’s closing level.

AUD/USD 30-Minute Chart

However, as seen in the 30-minute chart above, the AUD/USD still remains comfortably above the 79 cent level, underpinned by strong gains in commodity markets and a soft US non-farm payrolls report for August which saw expectations for a further rate hike from the Fed this year continue to slide, weakening the US dollar as a consequence.

Headline payrolls grew by just 156,000, below the 180,000 level expected, resulting in the US unemployment rate ticking up from 4.3% to 4.4%. Perhaps of more importance in terms of the outlook for US inflationary pressures, average hourly earnings rose by 0.1%, below the 0.2% pace expected, leaving the annual rate unchanged at 2.5%.

While a weak result, as Rodrigo Catril, currency strategist at the National Australia Bank points out, it’s not all that unusual for August’s payrolls figure to disappoint, at least based on initial estimates.

“Seasonal factors in August were seemingly again at play — in recent years the first August numbers disappoint, but then experience substantial upward revisions — but with the economy still on expansionary mode and recent jobless claims remaining near record lows, it still seems reasonable to expect further declines in the unemployment rate over the coming months,” he wrote in his Monday morning note.

That statistical quirk kept the losses in the US dollar in check, as did the release of the ISM’s US manufacturing PMI report which revealed that activity levels across the sector improved at the fastest pace since April 2011.

That saw the Aussie dollar finish of its session highs on Friday, closing trade at .7967.

Turning to Monday’s session in Asia, geopolitics looks set to once again dominate despite the release of major economic data in Australia.

Ahead of Australia’s Q2 GDP report on Wednesday, markets will receive business inventories and company profits, two inputs that will filter through to the expenditure and income measures of GDP on Wednesday.

Business inventories look set to grow by 0.4% while gross company profits are tipped to slide 4% following a 6% increase in Q1.

Released alongside the GDP partials, ANZ will also release its job ads report for August ahead of official numbers from the ABS next week.

Outside of Australia, data highlights elsewhere include UK construction PMI and Eurozone investor sentiment. US markets are closed for the Labour Day Holiday.

Given the relatively quiet data calendar, the headlines resulting from North Korea’s latest nuclear test will almost certainly dictate sentiment and and movements across financial markets today.

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