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Busy data week for markets dominated by US non-farm payrolls on Friday

Published January 6, 2020

Author: Rhys Miles

Happy New Year to all. What looked last week like a resurgence in the AUD and its typical festive season rally subsided almost as quickly as it began.

US-Iran tensions appear to be the catalyst and look likely to escalate after President Trump said on Saturday that the US has targeted 52 Iranian sites that it would strike if Iran attacks Americans or US assets in response to a US drone strike that killed Iranian military commander Qassem Soleimani in Iraq.

Geopolitical risks aside it is a busy data week for markets, dominated by US non-farm payrolls on Friday night where a pullback is expected in the December number – to 162k from 266k. Australia’s November Retail Sales numbers come out during our day on Friday (at 11.30am); with an improvement to 0.4% expected after a flat number in October.

Australia also has Consumer Confidence, Building Approvals and Novembers Trade Balance due this week at a time when bushfires add to economic unease.

Chinese data – today’s Caixin Services PMI and Thursday’s CPI and PPI – will also play a part in AUD sentiment this week.

The ‘phase 1’ trade deal between the US and China helped to drive AUD/USD and NZD/USD sharply higher but 2020 will be the true test of whether trade improvements hold or deteriorate again ahead of the US elections. There are no major New Zealand economic reports scheduled for release this week leaving the NZD to trade on the back of AUD moves and the appetite for risk.

German and UK trade numbers are out this week; while the Eurozone has Retail sales and inflation data due. The UK also has manufacturing and industrial production numbers on the calendar.

So a busy data week indeed.

Whilst the AUD/USD has lost more than 1% from its 31 December 2019 high (at 0.7031) it remains in an uptrend and importantly has held above previous resistance at 0.6925.

 

 

Adam Nikitins and Stewart McCallum were appointed Joint and Several Voluntary Administrators of EncoreFX (Australia) Pty Ltd on 30 March 2020.

Rees Logan, Adam Nikitins and Stewart McCallum were appointed Joint and Several Voluntary Administrators of EncoreFX (NZ) Limited on 30 March 2020.

Any queries regarding the Administrations should be directed to encorefx@au.ey.com.