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AUD in focus ahead of jobs numbers

The main theme in FX markets was a sharp drop in the USD on the back of the Fed minutes and Ben Bernanke’s Q&A session.

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Volatility has ramped up after US trade as Fed chief Ben Bernanke’s comments post the Fed minutes sounded a dovish tone. Bernanke was taking questions at a conference and reemphasized that the Fed is in no rush to tighten. He said the current unemployment rate of 7.6% overstates the health of the US labour market and that the 6.5% unemployment rate is a threshold, not a trigger, for tapering. The chairman also hinted at leaving rates on hold for longer. This drove the USD lower against most of the major currencies with the US dollar index gapping below 83 to now trade at 82.89.

USD/JPY dropped below 100 to a low of 98.24 before bouncing back up to around 99.60. There were also some big moves in the risk currency space with EUR/USD nudging through 1.31 to a high of 1.321, while AUD/USD spiked to 0.93. It was a spectacular fall from grace for the US dollar index which had been trading at around 84.64 the previous session.

It’s a big day for Asia as well today with the BoJ set to hit the wires. While most analysts don’t expect any further stimulus from the BoJ, perhaps the sharp drop in USD/JPY today and the upcoming Upper House elections might prompt some action. Nikkei has already lost significant ground and is underperforming the region as the yen strengthens against greenback.

AUD/USD will be in focus today with local jobs numbers due out. The unemployment rate is expected to tick higher to 5.6% (from 5.5%) with just 300 jobs added. Following recent disappointing readings for Westpac consumer sentiment, ANZ job ads and NAB business confidence along with Glenn Stevens; it’s hard to see jobs numbers impressing. AUD/USD has already pulled back from highs in the 0.93 region and this could continue should the data disappoint. Later today we have the ECB monthly bulletin, German Buba President Wiedmann speaks and we also have US unemployment claims.

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