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Video Summary: In today's action we saw the AUD gain on the back of a very strong jobs report. A downgrade by Fitch of Ireland's credit rating caused the EUR to slide. In the US we saw jobless claims fall by 17K, better than expected. The GBP and JPY saw some choppy trading vs. the USD.
Partial Transcript:
Australia's Economy Adds Strong 54K in November --
From Japan to another Asian economy we see that Australia's jobs boom continued in November. The economy added 54.6K jobs in November, more than doubling the expected 21.3K gain. October's job gains were bumped up by 7K to 36.9K. Thew news shows that the Aussie labor market is not reflecting some of the other signs from the economy showing some slowdown, and this report could help economists revise up their perception of the Australian economy which would favor the AUD and put some pressure on the RBA to think about raising rate to 5%.
AUD/USD Gains on Jobs Data - Rallied following the release, bouncing up off the 50% retracement, Held its ground overnight as USD gained on European higher yielders, and is again on the march higher with short-term pivot at 0.9882. Will this data help the AUD to reclaim the momentum we saw in the most recent upswing? The short-term investor sentiment will control things in the near-term, this should help to support the AUD going forward.
Japan's GDP Revised Higher Than Expected -- Japan's economy got a surprise bump in the third and final version of 3rd quarter GDP. The economy expanded 1.1% q/q compared to the originally reported 0.9%, and higher than the forecasts of a 1.0% growth rate. Looking at that in annualized terms, GDP grew 4.5%, higher than the 3.9% reported last month. The boost came from higher capital spending which advanced 1.3% -- originally reported at 0.8%. Private consumption, which is about 60% of the economy, were up 1.2%. However, there were some factors propping up these numbers including the expiration of tax credits for buying fuel efficient and a hot summer than encouraged purchases of air conditioners. Overall, the expectation is for the Japanese economy is to contract in the 4th quarter, following 4 straight quarters of growth. A Bloomberg survey shows the consensus is for a 1.9% decline in growth as export demand has dropped off and the outlook for corporate profits is pressured by a higher Yen.
USD/JPY -- Yen gained following the release, then gave up those gains, and then strengthened again at the start of NY trading. US treasury yields were lower to end yesterda's session and slipped to open NY trading. That had given the pair support as of late, so if yields are weaker today, then the USD/JPY should remain pressured. If we mange to see yields return higher, and we break the 84.40 area, then we could see the pair target the 86 level.
US Jobless Claims - The number of U.S. workers who filed new applications for unemployment benefits fell by 17,000 last week to 421,000, the Labor Department reported Thursday, resuming a recent downward trend. The four-week average of new claims, meanwhile, dropped 4,000 to 427,500, the lowest level since August 2008. The moving average is considered a more accurate barometer of employment trends because it smoothens out quirks in the weekly data.
Despite the downward trend in claims and other improving economic data, the latest monthly jobs report issued last Friday showed little improvement in the labor market. The U.S. added just 39,000 net jobs in November, far below Wall Street projections.
EUR/USD - Fitch cut Ireland's credit rating to BBB+ from A+, three steps above non-investment grade, citing the mounting cost to rescue the nation's banking system. The euro declined following the downgrade and as Euro-zone periphery yield spreads widened out again, and a risk-off trading mindset had creeped in during Europe. In NY trading we see a small pullback for the EUR/USD pair, but it was short lived and the pair hit fresh daily lows in early NY trading.
GBP/USD -- It was a similar story for the Pound, except it had stronger rebound from its decline, paring more than 50% of its overnight losses. The BOE held rates steady at 0.5% and kept its bond purchase program unchanged. No real change in fundamentals here, but as we have seen of late, the GBP has been stronger than the EUR. The GBP/USD is in the midst of an upward sloping channel, while the EUR/USD is in a downward sloping one, meaning the GBP is a stronger currency right now than the EUR.
News Provided by FXTimes.com
http://www.fxtimes.com
Chief Market Analyst: Nick Nasad
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