The delayed release of non-farm payrolls has sent the greenback spiraling against other major currencies. The print came in below expectations at 148K jobs being added to the economy. This figure supports the criticized decision by the FOMC not to scale back bond purchases in its previous meeting and also cements the view that tapering is unlikely to occur any time soon. Whilst there was a decrease in the unemployment rate to 7.2% the main concert for the board will be the slowdown in positions added. Due to the negative print, the US dollar was dropped across the board, the euro rallied a full US cent to 1.378USD, the Aussie is now just above the 97 cent mark.
The volatility is likely to continue in today’s session with CPI data being released out of Australia. Expectations are for 0.8% quarter on quarter. This would show the first decent uptick in inflation since October 2012. This will be a key factor for the RBA in upcoming meetings when deciding on whether that “room” or “scope” for further easing still exists. Should we see the figure remain in the 0.4% range where it has been the last 2-3 quarters, we will likely see the Aussie come under some pressure.
Later on in the European session, the BOE releases the votes for and against increasing their respective QE package which will likely show all in favour of keeping it at its current level. With the English economy continuing to be a high performer in recent months it is unlikely to see any shocks from this release. The bank of Canada is also releasing a statement regarding monetary policy which will be heavily read by traders looking for clues for any shift in sentiment.
Joel Murphy
www.pepperstone.com Joel Murphy is a currency analyst and market commentator for Forex Broker Pepperstone and he regularly features on Sky Business News Australia. He has worked in both retail and institutional Forex for last 8 years and completed a Bachelor of Commerce and a Bachelor of Arts from Monash University
