Four thousand U.S. dollars are counted out by a banker
Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking

Bell FX Currency Outlook: The Australian Dollar spiked yesterday following a record breaking employment increase, but has given back any gains as the currency continues its slide lower.

Australia: The AUD has continued its downward slide despite a brief rally following yesterday's employment data. The currency is currently trading

just above the 0.91 against the USD, having touched a low of 0.9085 overnight.

The big news in Australia yesterday was the record rise in employment, with employers adding 121,000 new jobs in August (15,000 expected) and the unemployment rate falling to 6.1% (6.4% expected).

This was the largest increase since 1991 and also the largest seasonally adjusted rise since 1978. The rise was mostly driven by gains in part-time

jobs, which was up 106,700, while full time jobs increased 14,300. The AUD spiked from 0.9150 to 0.9200 over the announcement but steadily

gave back any gains over the course of the afternoon. For the second month in a row changes the ABS have made to the labour force survey

methodology appear to have clearly impacted on the outcome, with the market very skeptical of these results and many expecting to see downward revisions next month.

Further weakness in iron ore prices (down 0.4% to $81.90/t) is also adding to the pressure on the AUD. It should be a quiet day with no domestic data releases.

Majors: The USD continued its rally overnight, rising to a 14-month high despite worse than expected initial jobless claims, which rose from 304K

to 315K. Last night was a continuation of the themes we have seen all week with the USD strengthening against carry currencies as bets on US

interest rate hikes continue to rise.

The pound climbed versus its 16 major peers after a second poll in two days showed supporters of Scottish

independence lost ground a week before a vote that could lead to the breakup of the U.K. Canada's dollar fell as data signaled the housing

market is fading as a driver of economic growth.

Earlier this morning New Zealand's central bank signaled it will keep interest rates on hold for longer as it lowered inflation forecasts and repeated calls for a weaker currency, sending the NZDUSD cross to a seven-month low. In the US tonight, retail sales for August are the key release.

Economic Calendar

12 SEPT JN Industrial Production MoM/YoY Jul

Ec Industrial Production SA MoM Jul

US Retail Sales Advance MoM Aug

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