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Greenback weaker following disappointing Non-Farm print

Monday 10 January, 2022

Daily Currency Update

The Australian dollar dropped nearly a full cent from 0.7270 on open last week following rising concerns of inflation in the United States. Fuelling further falls were the FOMC meeting minutes released on Wednesday as the Federal Reserve raised the expectation that interest rates will need to be raised earlier than expected to compact rising inflation fears. Weekly lows were seen on Friday morning at 0.7129 before the AUD/USD recovered 0.29% higher on the day. The ASX 200 rallied 1.29% to recover some of the losses felt mid-week. The Greenback was sold off following the latest Non-Farm Payrolls figure, disappointing markets as 199,000 jobs were added to the market against the consensus of 400,000. The Australian dollar closed the week at 0.7180. The Australian dollar opens this morning at 0.7175 ahead of the release of MI Inflation Gauge and building approvals for the month. We expect support levels to hold onto moves approaching 0.7140 while any upward push will likely meet resistance at the 72 US cent handle.

Key Movers

The headline act on Friday was the Non-Farm Payrolls print which fell short of expectations on Friday. 199,000 jobs were added to the market in December, and the unemployment rate improved to 3.9%. With the US Jobless rate at below historical averages, there are expectations that the Federal Reserve is likely to begin hiking interest rates in March. The latest CME Fedwatch numbers show a 70% chance of an interest rate increase at the March Fed meeting, up from 50% on the 31st of December. The US Dollar Index (DXY) finished 0.52% lower to 95.73. Elsewhere all G-10 currencies advanced against the Greenback, Cable up 0.41% to 1.3585 and the Euro 0.58% higher to 1.1360. This week looks firmly centred at inflation figures due for release in the United States, currently running at 6.8% p/a and could increase to over 7% on an annualised basis. Both retail sales and PPI numbers are also due for release this week in what is shaping to be a busy docket in North America.

Expected Ranges

  • AUD/USD: 0.7140 - 0.7200 ▲
  • AUD/EUR: 0.6300 - 0.6350 ▼
  • GBP/AUD: 1.8750 - 1.9100 ▲
  • AUD/NZD: 1.0550 - 1.0650 ▼
  • AUD/CAD: 0.9020 - 0.9100 ▼