The exchange rate today is looking decidedly on the back foot with U.S jobs numbers disappointing on Friday. We announced here last week, that 200,000 new jobs would likely be the number that sees a rally and boost in optimism, however that did not come to fruition with jobs created dipping to their lowest level in around a year, 69,000 and well short of the 155,000 anticipated. Given the risk asset it is, the Aussie dollar is now trading at fresh lows near 0.9650 and threatens to push through this key support level when Aussie equities open at 10am. The poor jobs number’s though did see a slight respite for EUR/USD, which rallied, but remains under pressure near 1.2400.
Slowing jobs growth was not the only new U.S data over the weekend to sink our teeth into, with personal income, construction and manufacturing data also released. The data generally was weak and showed signs of slowing in personal income and manufacturing, while construction spending showed an increase proving not all doom and gloom. However, it is hard to go past that poor U.S jobs number and this did result in wide-spread losses for U.S equities which had a horror day with the NASDAQ losing as much as 2.8%, the S+P and Dow were equally disappointing. The poor jobs number could see QE3 take place and a subsequent rally in optimism in the hope that this stimulus package could be the last.
In Europe, Germany has conceded to giving Spain more time to reduce their budget deficit. The current target is a deficit of 3% of GDP by 2013. Perhaps relieving some pressure on the debt riddled Spanish economy. Elsewhere, UK manufacturing fell to 45, its lowest point in three year’s and this saw European equities also take a hit with the worst performer the German DAX, down as much as 3.5%.
Data to be released in Australia this week, includes the cash rate on Tuesday followed by the unemployment rate on Thursday. Despite a cut in interest rates last month by the RBA, further cuts are not outside the realm of possibility and this could see the exchange rate today fall in anticipation of a cut. Data around the world is looking quite negative again and speculation of further stimulus in the U.S and slashing of key interest rates in the Eurozone are well founded. These sorts of stimulus could see renewed positive sentiment, however again this hinges on the outcomes of a Greek vote and what’s done to help Spain.