AUD Drops Lower Amid Strong US Employment

AUD

The Aussie dollar takes a battering against the majors, as RBA interest rate hikes seem to be at their peak and other central banks play catchup. Asian equities were red into the close, with the ASX down 0.5% and the SHANGHAI COMP down 1.1%. There were no data releases out on Friday, with RBA Assistant Gov Hunter speaking this morning about AI and the Australian economy at the UBS Australasia Conference. Chinese CPI and PPI y/y are set for release today, with CPI expected to drop to 0.8% from 0.9% and PPI lift to 5.4% from 5.0%.
 

USD

The AUDUSD takes another hit into the weekend, dropping into a 7-month low, opening this morning at a rate of 0.6872. Wall Street was mixed in retracing some of its losses, with the NASDAQ up 1.1%, S&P 500 up 0.3% and the DOW JONES down 0.5%. October payrolls came in well ahead of forecasts at +165k (exp. +70k), with September revised up to 60k and a net +84k in revisions over the prior two months. Unemployment surprisingly dipped to 4.1% as participation edged up to 61.9%, while average hourly earnings beat expectations at +0.4% m/m (exp. +0.3%) and +3.1% y/y (exp. +2.9%). The University of Michigan’s November sentiment index rose to 51.0 from 48.0, against forecasts of no change, with both current conditions and expectations stronger than expected. One-year inflation expectations eased to 4.3% (exp. 4.6%), while the 5–10 year measure was in line at 3.4%. Several FOMC officials speak this week, with Williams, Waller, Jefferson, Hammack and Paulson most closely watched as 2026 voting members.
 

EUR

The AUDEUR opens the day lower at 0.6161, with the pair pushing to a monthly low on Friday. European equities took a hit, with the DAX down 1.9% and the CAC down 0.8%. German Industrial Production m/m came in higher than expected at 0.7% (exp -0.1%), but still down from 1%. Tonight will see the Eurogroup and ECOFIN meetings which could firm their insight into how they will tackle inflation.
 

GBP

The AUDGBP opens lower at 0.5140, touching 7-month lows of 0.5122 as the Aussie Dollar dropped following global recession fears. UK equities followed suit, with the FTSE closing -1.0%. Tonight will have Bank of England Governor Bailey speaking at the University of Zurich, with traders hoping for information on future monetary policy. The next major economic data piece out of the UK this week will be GDP m/m (exp. 0.0%) on Thursday night.
 

NZD

The AUD/NZD pair opens slightly lower at 1.2339 following Saturday’s indecisive Parliamentary Elections. Prime Minister Christopher Luxon’s coalition holds a razor-thin lead, but with special votes still to be counted, New Zealanders face potential weeks of uncertainty while a government is negotiated. With no major domestic economic data scheduled this week, post-election political negotiations will remain the primary driver for the Kiwi Dollar.