Intraday Market Thoughts

AUD/USD Nears 1.06 With Jobs Data Upcoming

by Adam Button
Jan 16, 2013 23:26

The Australian crept higher in US trading on optimism about the jobs report and the Chinese economy. On the day, the yen was the top performer while the pound lagged. US economic data continues to point to modest growth.

The euro rebounded above 1.3300 in US trading from a low of 1.3257. Overall, the market lacked inspiration. US CPI rose 1.7% compared to last year which was slightly lower than the 1.8% consensus. The Fed is unconcerned with inflation at the moment so it was not a market mover.

US industrial production rose 0.3% in December, which was in line with the consensus estimate. The underlying data was stronger than the numbers suggest because of a sharp drop in utility production due to warm weather. The manufacturing component rose 0.8% which augurs well for future growth.

The final report was the Fed's Beige Book anecdotal report. All 12 districts reported modest or moderate growth and markets had no reaction.

The market reacted after PM Monti told Italian TV the financial crisis was over. He added that the economic crisis was ongoing but some cheeky traders decided his first comment was a sign that leaders had grown overconfident and sold the euro, dropping in 20 pips.

The focus now shifts to the Australian dollar, which has been trapped between 1.0520 and 1.0600 for the past week. It could break out on the employment report upcoming at 0030 GMT. The three previous reports have handily beat expectations despite doom and gloom in the local press. That could mean it's payback time or it could point to a reading higher than the 4.5K expected. The unemployment rate is forecast to rise to 5.4% from 5.2%.

Act Exp Prev GMT
CPI (DEC) (m/m)
0.4% 0.3% -0.2% Jan 16 10:00
CPI (DEC) (y/y)
2.2% 2.2% 2.2% Jan 16 10:00
CPI - Core (DEC) (y/y)
1.5% 1.4% Jan 16 10:00
Industrial Production (DEC) (m/m)
0.3% 0.3% 1.0% Jan 16 14:15
Employment Change s.a. (DEC)
2.3K 13.9K Jan 17 0:30
Unemployment Rate s.a. (DEC)
5.4% 5.2% Jan 17 0:30

Latest IMTs