Australian Dollar Outlook 6/6/2011
Australia: With only 54k of jobs created in the US in May, versus predictions of 165k after a rise of 244k in April, the slowdown was explained away by analysts who believe the combination of high oil/gasoline prices, continuing supply disruptions in the productions of autos that flowed from the Japanese earthquake of several months ago and severe weather conditions contributed to the poor number.
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The unemployment rate rose slightly to 9.1%from 9% as more people joined the labour force. The US equity markets were all softer which continued the trend of the last several days and the AUD weakened as well initially before bouncing back due to more talk that the US Fed will continue with their easy monetary conditions for longer to ensure the US recovery continues.
Suggestions that Greece would not be allowed to default on its next debt maturity in July and that additional funds would be made available aided the AUD as well. We expect the AUD to trade relatively firmly over the next few days.
This week's major focus will be on the RBA's announcement tomorrow afternoon, where no change is expected in the 4.75% cash rate and then we have labour force data on Thursday. Today we will see the TD inflation index, ANZ job ads, and the AiG construction index for May announced.
Majors: The EUR continues to maintain its strength versus the USD as the EU agreed that Greece will be given more time and more money to sort out their sovereign debt issues.
The actual details are still to be announced but this was enough to keep the EURUSD rate above 1.4600 and near a one month high. Lower yields on US treasuries where the 10 year maturity has fallen through 3% were thought to fuel more buying of the EUR.
The GBP continued its generally weak tone with disappointing recent PMI services data. The CHF continues on its strong path rising to a new record high against the USD.
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