US jobs miss lifts Aussie and kiwi
The Aussie and kiwi both rebounded after a much weaker-than-expected US jobs report raised doubts about the strength of the US labour market.
US payrolls rose by just 26,000 in September, well below expectations for 59,000. August payrolls were also revised lower to 133,000 from 162,000, while the unemployment rate rose from 4.1% to 4.2%.
The softer jobs report weighed on the US dollar and provided support for risk-sensitive currencies.
However, bond markets remain the dominant market story, with elevated US Treasury yields continuing to shape FX market direction.
US shares were resilient despite the weaker employment data, with the S&P 500 and Nasdaq remaining close to recent highs.
AUD/USD staged a short-term rebound. Initial resistance is located at 0.6985, followed by 0.7020. Support is seen at 0.6920.
NZD/USD also recovered, although a clear reversal signal has yet to emerge. Key support remains at 0.5600. Resistance is located at 0.5640 and 0.5685.
Tokyo inflation strengthens BoJ rate hike case
Tokyo inflation accelerated sharply in September, strengthening the case for further Bank of Japan (BoJ) rate hikes.
Core CPI rose to 2.7% from 1.8%, exceeding expectations of 2.4% and moving further above the BoJ’s 2% target. Excluding fresh food and energy, inflation increased to 3.0% from 2.0%, while services inflation accelerated to 2.3% from 1.4%.
Although the expiry of water subsidies contributed to the increase, broader gains in food, transport, hotel prices and wages suggest underlying inflation pressures remain firm.
Markets have almost fully priced in a BoJ rate hike by December.
USD/JPY is trading near 157.82, around 4% below its 23 July high of 163.99. Initial resistance is located at the 50-day EMA of 157.99, followed by the 100-day EMA at 158.52. Key support remains at 157.00.
Fed minutes in focus this week
Australia opens the week with the Melbourne Institute inflation gauge and New Zealand ANZ commodity prices on Monday.
Tuesday brings the Westpac consumer confidence survey. Any further deterioration from the previous 84.4 reading may add pressure to the Australian dollar.
In the US, the ISM services index and trade balance are due on Tuesday, while Thursday’s Federal Reserve meeting minutes are the key event of the week and could provide important clues on the outlook for US interest rates.
Across Asia, Japan’s wage data and China’s foreign reserves will be closely watched for further signs on the outlook for regional monetary policy and growth.
The week concludes with Canada’s employment report and the University of Michigan consumer sentiment survey.
Aussie, kiwi rebound from lows
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 5 – 10 October
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
