Australian one dollar coins
A handful of Australian one dollar coins is shown in Sydney, February 18, 2004. Reuters/Tim Wimborne

Bell FX Currency Outlook: The Australian Dollar has plunged to a one-month low after strong US employment figures on
Friday night.

Australia: The AUD is down over a cent from this time on Friday following across the board strength in Friday’s US payrolls report (see details below). The AUD was the worst affected of the G10 currencies, currently trading around 0.7025, down from 0.7150 where it was trading most of Friday. The NZD wasn’t far behind, down 1.35% to 0.6525. Losses have been compounded first thing this morning following Sunday’s release of October China trade data. Though the overall trade surplus of $61.6bn
was in line with expectations, this came about on weaker than expected (negative) export and import growth rates. Exports were down 6.9% y/y from -3.7% and the -3.2% expected, and imports down 18.8% y/y, up from -20.4% in September but worse than the -15.2% expected. Of direct relevance to Australia, China’s customs data shows iron ore import volumes down 12.3% on the month and 4.9% down on a year ago. Coal imports were 21.4% down on the month and 30.7% lower than a year ago. There are no major data releases for Australia today (just ANZ job ads), but coming up this week we have NAB business confidence tomorrow, several key Chinese releases on Wednesday and Aussie employment data Thursday.

Majors: As stated above, strong employment data was the driver, with the USD up against all the G10 currencies. US non-farm payrolls gained 271k (way above the +180k expected) in October, while the unemployment rate declined 0.1% to 5.0% (as expected). This was the largest monthly employment gain this year, the lowest unemployment rate since 2008, and the strongest average earnings growth since 2009. Overall, these data highlight that conditions in the US labour market are
picking up and that satisfies the Fed’s criteria of “some further improvement in the labour market” for lifting the Fed funds rate.
Expectations for a December hike are now sitting just below 70%. Against the USD the EUR fell 1.3% (to 1.0720), the GBP down 0.66% (to 1.5050) and JPY just over 1% weaker (to 123.25). Tonight looks relatively quiet on the data front, with just the release of German trade data and Eurozone Sentix investor confidence.

Economic Calendar 09 NOV

  • AU ANZ Job Advertisements Oct
  • US Labor Market Conditions Index Oct
  • US Fed’s Rosengren Speaks On Outlook for US Economy

BellFx

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