The Australian Dollar to US Dollar (AUD/USD) Exchange Rate made over a percent recovery yesterday from its 6 year record low the previous night of 75.61 US Cents making it to a high of 77.31 US Cents during the last 24 hours trading session
Only marginal gains were made during the local trading session following the much anticipated release of the Australian Bureau of Statistics employment data out of Australia. The result was a positive signal for the Australian Economy with the unemployment rate falling from the 12 year high last month of 6.4% to 6.3%. 15,900 jobs were added to the labour market including 10,300 full time jobs and 5,300 part time jobs. Whilst this is a positive sign for the struggling economy, the result did not provide any significant rally in the ‘Aussie’. The primary contributing factor to the lack of AUD movement was that the participation rate declined marginally and the result was not significantly different to that of the economist forecasts.
ANZ economists said that they expect the employment rate to continue to climb and remain at an elevated level for an extended period. AMP Capital chief economist Shane Oliver is of the belief that this will require the interest rates to be taken lower again. Stating ‘Our view remains that the RBA will cut the cash rate again to two per cent in the next two months, with a high chance it will cut below that during the second half of the year,’
BlackRock head of Australian fixed income Stephen Miller said to Australian Associated Press ‘I don’t think the employment numbers were much to write home about, they were pretty much in line with expectations,’, he mentioned that the market was more focused yesterday on the figures due for release out of the US during the offshore session .
The US overnight had a plethora of high tier data out with mixed results, including the monthly release of retail sales was an unexpected decline of 0.3%. The third consecutive month that the figure has been in decline, the January figure was a decrease in spend of 0.8%. The Department of Commerce indicated that the key areas for the reduced spending included restaurants and home improvement stores.
The US also released their weekly unemployment claims, which showed that the number of people looking for work in the US fell last week, indicating a strong improvement in employment numbers. The number of applicants seeking benefits dropped from 306,000 down to 289,000. Whilst the lower number of benefit applicants was a positive sign for the US economy and labour market, it was not enough to outweigh the importance of the downward trend in Retail spending.
Adding to the downward pressure on the US Dollar, the US Federal budget balance fell more than the forecasted expectation. The release indicated that the Federal Government is running at a deficit; spending was significantly higher than income. The forecast was for -188.9B however the result came in at -192.3B. Whilst this is 2% better than the same time last year it brings the annual deficit to 387 Billion.
We can expect the Australian Dollar to US Dollar Exchange Rate to remain stable today with no high tiered data out locally.
Tonight the US will release Producer Price Index (PPI) and Preliminary University of Michigan (UoM) Consumer Sentiment and Inflation Expectations. Investors are watching all data releases out of the US closely to provide early indications of whether the Fed will raise the official cash rate this year.
The Australian Dollar to US Dollar (AUD/USD) Exchange Rate is currently trading at 77.01 US Cents at 8:30 AM AEST today.