This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
US treasuries strengthened on Friday, with 10-year yields falling to 2.29% (down 9 bp) on the back of the payrolls release. Non-farm payrolls were up 214,000 in October, falling short of expectations of around 230,000. However, the unemployment rate actually fell to 5.8% and the previous two months were revised upwards by 31,000. Average hourly earnings also fell short at 0.1%. Equities were mixed on the back of the jobs numbers but the price action in treasuries and the USD suggests traders took the data as slightly dovish.
AUD likely to be sold into strength
The greenback lost ground to the majors with some interesting moves in AUD/USD. The pair managed to reverse from Friday lows – the lowest level since 2010 – and reclaimed the $0.8600 handle. After the recent, sharp sell-off, I was eyeing a near-term bounce in the pair and feel it’ll remain in focus as data is due out of China today.
We have China’s CPI and PPI set to be released at 12.30pm AEDT, with CPI expected to remain at 1.6%. Locally, we had home loans data which came in at -0.7%, worse than an expected -0.3%. I feel sellers will continue to consider selling into strength, particularly into the $0.8700 region. The 38.2% retracement of the 29 October-to-7 November drop comes in at $0.8620 and I feel it will be a key level in the near term.