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Soft labour market data forces USD to fresh lows under Trump Presidency

By MATT RICHARDSON

The Australian dollar moved higher into the weekly close on Friday as investors took advantage of a softer than anticipate U.S jobs report and pushed the commodity driven unit back through 0.74 U.S. cents. Having touched intraday lows at 0.7374 the AUD rebounded bouncing to session highs at 0.7443 as grim U.S macroeconomic data forced investors to revisit their expectations for multiple rate hikes in half two of 2017. The Aussie has remained largely range bound through the last fortnight bouncing between support at 0.7380 and resistance on approach to 0.7480/0.75. Attentions this week turn to the RBA and tomorrow monetary policy statement. We anticipate the board to maintain its current neutral policy stance with rates to hold at 1.5%.

The Great British Pound offered little to excite investors through trade on Friday bouncing within a relatively tight 50 point range for much of the day. With little macroeconomic data on hand and a break in opinion polls investors seemed wary of extending positions ahead of the June 8 General Election. While the Conservatives are still pegged to retain government variances in polling suggest a swing in the majority which could have a wider impact on Brexit negotiations and medium term direction. Opening sharply lower following the horrific events at the weekend with London again besieged by terror attacks attentions turn Thursday’s election for direction and guidance. We are watching resistance at 1.2960/1.30 and support at 1.2780 in the lead up. 

The New Zealand dollar’s upward momentum continued through trade on Friday following weaker than expected U.S labour market data. The NZD surged through resistance at 0.71 to touch intraday day and two month highs at 0.7142 after May’s non-farm payroll report showed a step decline in the number of new jobs added to the US economy. Further adding to the Greenbacks woes was a downward revision to March and April numbers suggesting labour market momentum is waning and that the recent slowdown may be more than just a seasonal correction. With resistance countering moves toward and through 0.7150 investors will be keenly attuned to macroeconomic data sets over the coming weeks as markers for a potential shift in Fed policy and the catalysts for additional Kiwi upside.  

The U.S Dollar touched a new low under the Trump Presidency after a softer than anticipated non-farm payroll print forced investors to recalibrate monetary policy expectations. The monthly Job’s report showed fewer than expected new jobs added to the economy in May while average hourly earnings and wage growth were largely unchanged and data for March and April were revised lower. The slowdown suggests perhaps a shift in labour market momentum and while we still anticipate the Fed will raise rates later this month expectations for additional rate hikes later in the year are waning. The dollar slipped below 110.50 against the Japanese yen while the Euro edged nearer 1.13 touching intraday highs at 1.1280. Attentions now turn to revised labour costs and services data for direction through trade on Monday ahead of ECB rate announcement and commentary. A hawkish Draghi and ECB could prompt additional Euro gains as the market is currently leant toward a controlled and perhaps dovish statement continued accommodative monetary policy.