Friday’s US Payroll numbers was mixed for markets with jobs growth rebounding but wages growth softening. AUD/USD emerged a touch weaker, around 0.7105 with US equities closed at a 6-month high. US Payrolls saw U.S. employers adding a net 196,000 jobs to their payrolls in March, rising sharply from a 33,000-net gain in February. The jobless rate in March was 3.8%, unchanged from the month before and wage growth slowed, reinforcing the Fed’s message that interest rates are on hold for the moment.
Trade deal negotiations between Trump and Xi Jinping seem to be moving in the right direction with Trump saying a deal may be reached within four-weeks reiterated by the White House economic adviser Larry Kudlow saying they are getting ‘closer and closer’.
On the Brexit front, negotiations between the government and the Labour Party are expected to continue throughout the week as Prime Minister May travels to Brussels to seek a further delay to Brexit to 30 June 2019. The Prime Minister insists that cross-party talks were the only way to deliver Brexit after MPs voted down her withdrawal agreement three times and also passed legislation to block a no-deal Brexit.
AUD/USD, which earlier fell from 0.7110 to 0.7080 following the RBA’s statement, extended to 0.7053 as the USD rose. Its decline over the day was exceeded in the G10 only by the kiwi. NZD/USD fell from 0.6780 to 0.6739 – a six-week low. AUD/NZD recovered from 1.0435 post-RBA to 1.0470.
From a technical perspective, AUD/USD pair is trading at 0.7104, we see initial support at 0.7050 followed by 0.7004. The market faces near term resistance at 0.7127 followed by at 0.7207.
- Quiet calendar today with ANZ Job Ads for March (L: -0.9%);
- Locally this week, there is February Housing Finance approvals tomorrow, NAB looking for a 0.5% rise in the headline number of owner-occupied approvals, partial payback after a 1.2% Jan decline; the investment lending flows will be as pertinent as owner-occupier flows;
- Markets will watch with interest in the RBA Deputy Governors speech on Wednesday, especially after last week’s read through from the amendment to its forward guidance to indicate the RBA has opened to door to the possibility of adjusting policy.
- In addition to the Brexit and trade talk noise, there’s a further US data, a market highlight being the CPI as well as the FOMC Minutes (both Wednesday) and more Fed speak, this time from Governor Clarida (Tuesday). The ECB meets, reports suggesting the Draghi wants to formally push out forward guidance to begin the journey back from negative interest rates.