The Australian Dollar has posted strong gains on Monday, as AUD/USD traded as high as 0.7244 in the North American session.
The Aussie received a boost as Chinese Industrial Production posted a strong gain of 6.2%. The strong Chinese Industrial report helped bolster the Aussie, as it came in well above the forecast of 5.7% and a five-month high. Australian employment numbers also impressed last week, as Employment Change surged by 71.4k new jobs, raising doubts about the accuracy of the data. The unemployment rate edged lower to 5.8%, better than the forecast of 6.0%.
Today the RBA will release the minutes of its last policy meeting. The RBA held rates steady at 2.00%, but any hints about further monetary easing could send AUD/USD lower.
In the US, there were no major releases on Monday. The markets are keeping a close look at US CPI, which will be released on Tuesday and of course the big bang on Wednesday; with still above 80% of economists generally believing that the US will raise interest rates for the first time in 7 years.
The US labor market has been strong, so weak employment readings last week came as a surprise. Unemployment Claims shot up to 282k, its highest level in two months. The markets had expected a reading of 266k. Still, the four-week average of unemployment claims remains relatively low. This was followed by JOLT Job Openings, which slipped to 5.38 million, sharply lower than the previous month’s reading of 5.53 million. This soft figure was way off the estimate of 5.59 million
Will these weak numbers deter the Federal Reserve from proceeding with an expected rate hike at the policy meeting on December 16? There are no guarantees as to what the Fed has in mind for the markets, but the likelihood remains very high that a rate hike will occur,
In other news to round out the week we have quite a bit of data out of the UK and Euro zone which could help to shape our other major trading currencies, most notably UK CPI tonight and Average Earnings Index Wednesday. Tonight we have the German ZEW Economic Sentiment featuring “Time Person of the year” in waiting Angela Merkel.
We also have the Monetary Policy Statement out of Japan on Thursday and Canadian Core CPI to round out what is bound to be a cracking end to a big week on the markets.