The USD is now one percent stronger against the AUD as the US are sitting on very strong employment figures.
To end the week last week the employment figures out of the USA were released and were the best figures in years. In particular, the Non-Farm Payrolls are a vital economic data set released shortly after month end. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity. The Friday figure was released at 248,000 jobs created, this smashed expectations of 216,000. Considering the figure sat on 180,000 jobs created the previous month, the market reaction was strong and the AUD fell sharply against the USD after the release.
Along with the Non-Farm Payroll release, the unemployment rate also smashed expectations and landed on 5.9%; the market was expecting the same figure as the last month at 6.1%.
The US Trade balance was another positive data release providing support for the USD. The Trade Balance is important because it is a representation of export demand and currency demand, as foreigners must buy the domestic currency to pay for the nation’s exports. Export demand also impacts production and prices at domestic manufacturers which all contribute to the country’s Domestic Production. The figure has been following the trend of “less imports, more exports” and has landed on -40.5 billion month on month, from expectations of -42.5 Billion.
After yesterday’s Bank holiday, we are expecting this afternoons Cash Rate Decision and accompanying statement to have a minimal effect on the markets, with the Cash rate expected to remain on hold, and Governor Stevens’ wish of a weaker AUD starting to come to fruition.