The greenback rallied and equity markets hit 14-month highs on Friday as investors cheered on the latest jobs data in the states. US Non-farm Payrolls for November fell by 11,000, outstripping the 125,000 cuts predicted. Despite the latest showing overwhelming signs improvement, the jury's still out on whether the latest data is an anomaly waiting to be corrected, or the beginning of the end for economic instability. This sentiment was echoed in President Obama's cautiously optimistic reaction as he indicated whilst the direction in pointing to a positive trend he stated good trends, don't pay the rent. Whatever the case, the latest data has economist projecting the scales to turn to positive job creation by February 2010 - with the odds of a sooner than anticipated rate rise now also on the cards. This was the primary driver for the greenback on Friday which made considerable ground against major counterparts. This is a particular milestone for the US economy, with the dire unemployment situation considered the missing link on a sustain recovery. Until now the bane on the economy remains with record unemployment which hit a 26 year high of 10.2 per cent in October, which resulted in US policy makers signalling intent to keep record-low interest rates on hold for an extended period.
Meanwhile, the latest burst of optimism has seen a broad based retreat on key commodities, metals and energies. The standout loser on Friday was Gold which snapped its recent winning streak losing over US$45 on the day to close at US$1,161 an ounce. This saw the Aussie follow suit retreating from early session highs of near 93 US cents to close at 9145 US cents on Friday. At the time of writing the Aussie is buying 91.36 US cents and we can expect further pressure on the higher yielding currencies, given continued interest rate hike banter from the states. This could prove to be the dominating factor for further gains on the Aussie in the near term, as the premise of interest hikes in the states, make the Dollar less appealing as a funding currency resulting in an unwinding of carry trade plays.