The Australian dollar has opened the new trading week steady, managing to hold most of the gains achieved on Friday evening following the release of US non-farm payrolls for February.
Here’s the scoreboard as at 7.50am AEDT:
- AUD/USD 0.7540 , 0 , 0.00%
- AUD/JPY 86.5 , -0.08 , -0.09%
- AUD/CNH 5.1911 , -0.0039 , -0.08%
- AUD/EUR 0.7061 , -0.0007 , -0.10%
- AUD/GBP 0.6198 , 0 , 0.00%
- AUD/NZD 1.0866 , -0.0025 , -0.23%
The recovery in the Aussie on Friday has surprised more that a few traders and analysts, coming despite the release of another strong payrolls report in the US which did little to dissuade the view that the US Federal Reserve will hike interest rates on March 15.
Payrolls increased by 235,000, more than the 200,000 lift expected, seeing the unemployment rate dip to 4.7% from 4.8%.
Wage growth bounced back and labour force participation also moved higher, adding to the strong report.
Despite that unilaterally robust outcome, Ray Attrill, global co-head of FX strategy at the National Australia Bank, said that was still not enough to encourage further buying in the US dollar.
“The US dollar fell along with Treasury yields while US stocks ended modestly higher in the wake of what was undoubtedly a good US employment report, but testament to both the ‘whisper’ numbers being to the high side of published consensus estimates and the absence of a smoking gun for the FOMC to lift its inflation and/or median ‘dot’ forecast on Wednesday,” he said.
Having fallen close to 2% from the highs struck earlier in the week, the lack of a clear catalyst to encourage further buying in the US dollar likely helped spur short-covering in the Aussie among traders.
The US dollar was also undermined by reports that members of the ECB’s governing council discussed possible strategies for normalising monetary policy at last Thursday’s council meeting, specifically the possibility of raising the deposit rate ahead of ending quantitative easing.
This helped put a rocket under the euro, and perhaps contributed to profit-taking in the US dollar.
The AUD/USD, as seen in the 5-minute chart below, was a beneficiary of this change in investor mindset.
While there are a raft of important domestic and international data and political events scheduled later in the week, there is nothing on the calendar to excite traders on Monday, suggesting that movements in the USD/JPY, US treasury yields and Chinese commodity futures may prove to be the most influential factors on the Australian dollar today.