Australian dollar dropped as the US dollar rose on strong nonfarm payrolls.
The Australian Dollar (AUD) is trading in positive territory after regaining intraday losses on Monday. However, the AUD had difficulties because to the blockbuster job statistics from the United States (US), which resulted in a significant jump in the US Dollar (USD), impacting on the AUDUSD pair. Additionally, The benchmark S&P/ASX 200 Index is retreating from last week’s record high, with mining and energy sectors bearing the brunt of the fall, putting extra pressure on the Australian dollar.
Australia’s trade balance fell to 10,959 million from 11,764 million.
The Australian Bureau of Statistics announced the January Trade Balance on Monday. The monthly report revealed a decrease, with the total at 10,959M vs the revised figure of 11,764M in December. Furthermore, the Judo Bank Composite Purchasing Managers Index (PMI) rose to 49 in January from 48.1 the previous month. The Services PMI improved, climbing to 49.1 from 47.9.
The Chinese Services PMI fell to 52.7 in January from 52.9 the previous month.
Meanwhile, TD Securities Inflation (YoY) increased by 4.6%, compared to the preceding growth of 5.2%. Furthermore, the Chinese Caixin Services PMI fell to 52.7 in January from 52.9 in the previous month.
The RBA is anticipated to hold the cash rate constant at 4.35% at its meeting on Tuesday.
The Reserve Bank of Australia The RBA is poised to announce its interest rate decision on Tuesday. In a Reuters poll, economists unanimously predict the RBA to retain the cash rate at 4.35%. Investors will pay particular attention to RBA Governor Michele Bullock’s statement on the monetary policy outlook for additional insights into the central bank’s attitude.
The US Dollar Index (DXY) rises to an eight-week high, buoyed by optimistic market sentiment as a March rate decrease appears doubtful. This sentiment is based on an optimistic labor market report released on Friday by the US Bureau of Labor Statistics (BLS), which revealed that Nonfarm Payrolls added 353,000 jobs in January, above the prior reading of 333,000 and the market consensus of 180,000. Additionally, average hourly earnings (YoY) increased by 4.5%, surpassing the Expected increase: 4.1%, up from 4.4% previously. Traders will also be watching the ISM Services Employment Index, which is set to be issued on Monday.
US Federal Reserve Chair Jerome Powell said that the March meeting is likely too soon to be confident in initiating rate decreases. With the economy in good shape, the Fed plans to be cautious about when it decreases interest rates. Powell stated that trust is increasing, but the central bank requires more assurance before taking the “crucial step” of commencing rate decreases.
Fed Chair Powell stated that they are making good headway on inflation and could move sooner if they see weakness in the job market or if inflation falls significantly. He noted that more sustained inflation may lead L for a subsequent move.
Daily Market Movers: Australian Dollar falls following strong US labor statistics
Australian TD Securities Inflation (MoM) increased by 0.3% in January, down from 1.0% in December.
Australia’s ANZ Job Advertisements increased by 1.7% in January, outpacing the previous growth rate of 0.6%.
The Australian Bureau of Statistics reported that monthly imports increased by 4.8% in January, up from -8.4% the prior month. Exports increased by 1.8%, compared to 0.6% previously.
US Average Hourly Earnings (MoM) rose 0.6% in January, beating the projected 0.3% and 0.4% readings in December.
The US unemployment rate remained constant at 3.7% in January, compared to the market consensus of 3.8%.
The US Bureau of Labor Statistics reported that January’s labor The Force Participation Rate stayed constant at 62.5%.
The Michigan Consumer Sentiment Index rose to 79 in January, above the expected 78.9 and December’s 78.8.
