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Currency Market Analysis

Jan 24, 2020 | Currency Market Analysis

Global Themes

Aussie gives up post-job gains as USD stages comeback

• AUD bounces on good job numbers
• USD stages late comeback as equities rally
• PMI in focus

Coronavirus drives overnight action

The Australian dollar jumped higher yesterday after a better local jobs report but gave back gains as the greenback strengthened overnight.

The greenback was boosted by gains in US shares with global equities rebounding late in the overnight session as the World Health Organization said the coronavirus did not yet meet the criteria for a global health emergency.

The WHO did declare an emergency in China and Asian shares were sharply lower yesterday.

Hong Kong’s Hang Seng fall 1.5% while Shanghai’s SSEC dropped 2.8%.

AUDUSD ends flat

The AUDUSD ended the session flat.

The Aussie was helped earlier after the December jobs report found 29k new jobs were created versus the 15k expected.

Importantly, the unemployment rate fell from 5.2% to 5.1%.

The news made an RBA rate cut less likely with the market pricing falling from 58% to 28% over 24 hours (source: ASX).

The Aussie was higher in Europe – nearing two-week highs in the AUDEUR – but weaker in Asia with the AUDJPY falling to two-week lows.

PMI in focus

The local news was released earlier today with the Australia manufacturing and services PMI numbers both slipping further into contraction.

Across the Tasman, NZ CPI was moderately above expectations, with an annual rate at 1.9% versus 1.8% expected.

Later, further PMI releases are due. The purchasing manager index provides the latest reading for manufacturing and services activity and is due from Japan, Europe and the US over the next 24 hours.

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