Intraday Market Thoughts

US Dollar Struggles Continue, NZ Jobs on Target

by Adam Button
Aug 6, 2013 23:54

The US dollar continued its descent following Friday's non-farm payrolls report. The kiwi was the best performer while fellow commodity currency CAD lagged. Early in Asia-Pacific trading, the unemployment rate rose to 6.4%.

The US dollar had several reasons to rally on Tuesday but ignored them. One was a less dovish comment from one of the biggest doves at the Fed. Chicago Fed president Evans said tapering was 'quite likely' to start this year and dismissed fears about rising mortgage rates. The June JOLTS survey, which measures job openings, also rose to a multi-year high. Most importantly, Ashraf detailed the upbeat trade figures and the positive implications for the dollar.

The dollar was unable to gain any traction on these headlines. Instead, USD/JPY traders focused on falling stock markets and others focused on a signal that tapering could be delayed. Atlanta Fed president Lockhart said curtailing QE is not definite if the economy is 'moping along.'

USD/JPY slid to a one-month low at 97.51 as the S&P 500 declined 0.6%. A report from Nikkei cited  draft copies of government fiscal plans that continued to indicate sales tax hikes.

The New Zealand dollar was slightly weaker after the Q2 employment report showed unemployment at 6.4% compared to 6.3% expected. The rate of jobs growth matched expectations but the participation rate ticked higher so the RBNZ is unlikely to stir. One area that could lead them to back away from rate hikes is a 1.7% rise in private sector wages compared to 1.8% expected.

Later, the highlight is Australian home loans for June at 0130 GMT.  AUD/USD has remained buoyant since the RBA decision and a good data point could spark a squeeze above 0.9000. Expectations are for a 2.0% m/m rise. The BOJ also starts its two-day meeting.

2 new trades were issued in GBPUSD ahead of tomorrow's highly anticipated Bank of England inflation report and the ensuing parliamentary testimony by BoE governor Carney. AUD longs and gold short remain also remain in progress in the latest Premium Insights.
Act Exp Prev GMT
JOLTs Job Openings (JUN)
3936 3895 3907 Aug 06 14:00
Home Loans (JUN)
2.0% 1.8% Aug 07 1:30
ANZ Job Advertisements (m/m)
-1.10% -1.60% Aug 06 1:30
Employment Change (Q2)
0.4% 0.4% 1.7% Aug 06 22:45
Unemployment Rate (Q2)
6.4% 6.3% 6.2% Aug 06 22:45
Labor Cost Index (q/q)
0.4% 0.5% 0.4% Aug 06 22:45

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