The Australian dollar is weaker as US wage growth goes up a gear

Photo by Peter Macdiarmid/Getty Images

The Australian dollar is trading weaker this morning, succumbing to a renewed bout of US dollar strength following the release of another robust US jobs report on Friday.
As Elias Haddad, senior FX strategist at the Commonwealth Bank explains, the US dollar rebounded during the session as an acceleration in US wage growth offset a slightly weaker-than-expected increase in payroll numbers.

“(The) USD lifted against most major currencies during Friday’s overnight session and US 10-year Treasury yields rose back above 2.40% following the positive US December non-farm payrolls report,” he said on Monday morning.

“While US non-farm payrolls increased less than expected by 156,000 in December, there was a 26,000 upward revision to the previous months’ job gains.

“Importantly, average hourly earnings quickened at a monthly pace of 0.4%, to be 2.9% higher on the year, the fastest annual pace of growth since May 2009,” he added.

As a result of the acceleration in wage growth, boding well for the outlook for inflationary pressures, the US dollar strengthened modestly, including against the Aussie.

AUD/USD 5-Minute Chart

The AUD/USD fell to as low as .7284 on Friday evening, before rebounding modestly into the close. It currently buys .7292 as at 7.40am in Sydney.

Here’s the full scoreboard:

  • AUD/USD 0.7292 , 0.0001 , 0.01%
  • AUD/JPY 85.31 , 0.10 , 0.12%
  • AUD/CNH 4.9944 , 0.002 , 0.04%
  • AUD/EUR 0.6922 , 0.0009 , 0.13%
  • AUD/GBP 0.5949 , 0.0021 , 0.35%
  • AUD/NZD 1.0466 , -0.0005 , -0.05%

Turning to Monday trade in Asia, there’s little on the economic radar that appears likely to substantially move the Aussie one way or another.

Domestically, building approvals figures for November, along with ANZ job ads for December, will both be released at 11.30am AEDT.

While there’ll be plenty of interest on both, it would take a shock outcome to cause anything other than a momentary twitch in the Aussie.

Regionally, there’s nothing to speak of, likely ensuring that movements in the Chinese yuan — influential on currency markets last week — will continue to be the centre of attention among currency traders.

Later in the session, markets will receive unemployment figures from the Eurozone, German trade numbers along with consumer confidence data from the US.

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