Bell FX Currency Outlook: The Australian Dollar retreated on Friday after trading on Friday afternoon over 1.0400 as concerns over the outcome of the US presidential election and the impending fiscal cliff in early 2013 overshadowed the better than expected US jobs figure for October.
Australia: Equity markets in the US were initially buoyed after the release of non-farm payroll numbers for last month saw an increase of 171k as compared to predictions of a rise of 125k.
Along with upward revisions of 84k for the last two months, the tone in financial markets was generally positive with European equities modestly up and initially the major US indices rose as well. Nevertheless, as the day wore on nervousness about the upcoming US election tomorrow and fiscal cliff issues dominated investors thinking and the Dow was lower by 1.1% and the S&P500 by 0.9% at the end of the day.
After a strong run by the AUD through 1.0400, our currency has come back to the mid 1.0300's. With a slew of economic data due this week and the US election tomorrow and the RBA cash rate decision tomorrow afternoon at 2:30 pm AEDT, we expect the AUD to trade in a fairly narrow range.
Later today we have ANZ job ads for last month along with Q3 retail sales and the trade balance for September as well as some inflation data from TD Securities. On Thursday we will see the latest employment data for Australia.
Majors: With the best job growth numbers in the US during the last 8 months which President Obama highlighted in his last few days of campaigning, the market generally ignored the better figures to look forward toward the next several months.
With private payrolls expanding by 184k and government jobs declining by 13k, the US unemployment rate rose slightly to 7.9% from 7.8% with the participation rate rising slightly by 0.2%.
The USD was stronger since the prospect of further stimulus from the US Federal Reserve decreased which saw the price of gold fall by over 2% to below US$1,700 an ounce (US$1,678).
Crude oil also fell by similar amount as the US government announced new measures meant to relieve the pressure on the consumer market on the east coast in light of the devastation brought by Hurricane Sandy.
The EUR was weaker after disappointing PMI data from Europe last week and this helped kick up the AUDEUR cross rate. Today is the second day of the G20 meeting in Mexico where we expect to hear of no significant new announcements.
Formal announcement of the new Chinese leadership is expected tomorrow.
5 NOV AU Retail Sales m/m
AU Trade Balance
AU ANZ Job Advertisements m/m
EU Spanish Unemployment Change
EU Sentix Investor Confidence
GB Services PMI
CA Building Permits m/m
US ISM Non-Manufacturing PMI
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