US Dollar Drops Further From Soft Labour Data
AUD
The Australian Dollar (AUD) opens at the upper end of its range against most majors this morning, with a generally weaker USD and an improving global risk mood providing the primary impetus. The domestic side saw the 3Q GDP figure print weaker than market expectations, which briefly pushed AUD/USD to lows of 0.65525 before it largely recovered. Asian equities finished the day mixed, with the Hang Seng trading -1.3% and Shenzhen -0.5%, while the Nikkei climbed +1.4%. Locally, the ASX 200 climbed +0.2%, led by the utilities and energy sectors. The AUD also benefited as Brent Crude rose 0.5% to $62.60 a barrel. Focus now shifts to the upcoming RBA Interest Rate Decision on Tuesday next week.
USD
The AUD/USD rate opens substantially higher at 0.6598 (up 0.6%), pushing through the 0.6600 level on broad-based US Dollar (USD) weakness driven by deeply disappointing jobs data. Wall Street saw a positive session, with the Dow Jones trading up 0.8%, the S&P 500 up 0.3%, and the Nasdaq up 0.2% entering the final hour of trade. The primary driver was the US ADP Employment Change for November, which printed a significant and unexpected decline of -32K. While subsequent data was mixed—Services PMI was revised down but ISM Services printed higher at 52.6 (with softer prices paid)—the net result was a weaker USD. US 10-year yields fell 3bps to 4.06%. Aside from the Unemployment Claims coming out tomorrow, focus remains on the major event next week, the US Federal Reserve Interest Rate Decision on Thursday.
EUR
The AUD/EUR cross opens flat at 0.5654, as the Euro held firm against the weak USD, pushing EUR/USD to highs of 1.1675, its highest level since October 29. A positive start for European equities saw the Stoxx trading +0.6% and the CAC +0.2%, though the DAX closed down -0.1%, leading to mixed results by the end of the session. The Euro's strength was supported by improving sentiment and risk-on flows. Today's session will see minor movement ahead of tonight's retail sales m/m, and employment change tomorrow.
GBP
The AUD/GBP cross opens lower at 0.4943, with the Pound showing resilience and trending upwards against the USD, pushing GBP/USD to highs of 1.33475. European markets closed with mixed results, and the FTSE was down -0.1%. UK 10-year yields fell to 4.465%. The cross is largely being dictated by GBP strength against the general USD weakness, allowing the Pound to gain ground on the AUD. With a quiet UK calendar, focus remains on cross-rate flow and the AUD's domestic performance ahead of next week's RBA announcements.
NZD
The AUD/NZD cross opens flat at 1.1432 (down -0.1%), failing to gain meaningful traction despite the AUD's strong risk-on boost. The New Zealand Dollar showed notable strength in the overnight session, with NZD/USD reaching 0.57745, indicating robust underlying demand for the Kiwi dollar which is holding the cross flat. There were no major data releases from New Zealand. The cross's trajectory today will be overwhelmingly dictated by the AUD's domestic reaction to the weak Q3 GDP data and cross-rate flow ahead of the RBA Interest Rate Decision next week.