The Australian dollar was the stand-out currency through an otherwise lackluster Asian morning Thursday, as the USD, along with other major currencies, continued to shuffle within recent ranges. The trigger for aussie-dollar’s weakness was the unexpectedly weak December jobs data, which showed the number of employed persons in December fell for the first time in four months, while the number of unemployed rose for the first time in three months, pushing up the unemployment rate to 5.4% from 5.3% in November. Aussie-dollar opened near the morning high of $1.0575 in Asia today and dipped to around $1.0533 after the jobs data, before finding some mild support which carried it back to $1.0552. “While not a startling one, it does suggest that the jobs market did ease in the last quarter of 2013,” commented Westpac economists. “The leading indicators suggest that the labor market has continued to weaken at the start of 2013 and we are yet to see what happens when the resources investment boom starts to peak in the second half of this year.” “The sub-consensus headline jobs number produced a textbook response, aussie-dollar falling quickly to the day’s low of $1.0533 before steadying around $1.0545,” Westpac added. The down move resumed after that as positions were cut ahead of tomorrow’s China GDP report, with aussie-dollar eventually falling to a late morning low of $1.0499. Money market pricing for a 25bps cut in the Reserve Bank of Australia’s cash rate in February increased slightly in immediate reaction to the disappointing December labor force number but subsequently came back to around 34% probability. Nomura analyst Martin Whetton said this pricing is fair since there is still Q4 CPI data to be released next week and negotiations on the U.S. debt ceiling are ongoing. In other pairs, euro-dollar was at $1.3277 as the morning ended here, at the low end of a $1.3276 to $1.3314 range, and down from last night’s U.S. close of $1.3289. Dollar-yen was at Y88.24, also down near the day’s lows, in a Y88.23 to Y88.78 range, but not very far from the overnight close of Y88.38. For these pairs, rallies towards recent highs, $1.3404 in the case of the euro and Y89.67 for dollar-yen, will likely see profit-taking for fear that they start making lower highs, indicative of a downtrend. If these peaks give way however, the market will brace for moves to $1.3500 and Y90.00, key psychological resistance levels.
EasyForexNews Research Team