In another sentiment driven session in the US on Friday the greenback moved in accordance to investor reaction to the latest jobs data. Non-farm payrolls showed the US economy shed 20,000 jobs in the month of January, against expectations of 15,000 new jobs created. December's payrolls which originally reported 85,000 were also revised to 150,000 jobs cuts. Despite the decline, the US unemployment rate fell to 9.7 per cent due to positive revisions for November's data which was revised upwards to 64,000, from the originally reported 4,000 new jobs created.
In the volatile ensuing minutes, the greenback lost mild ground against major counterparts before market pessimism prevailed resulting in a risk fuelled move to the perceived safety of the low yielding Dollar. We also saw the economic woes of the Greek economy weigh on market sentiment as investors questioned the fall-out on respective economies. However US equities were able to squeeze out some moderate gains by close of business, resulting in some mild strength across key commodities in-turn helping the higher yielding Aussie dollar. At the time of writing the Aussie dollar is buying 86.8 US cents and appears to well bid ahead of what's shaping up to be a reasonably positive day on the local bourse.
The week ahead
We expect continued strength on the local unit to be contingent on where the balance of risk falls in the US. Major Key economic news from the States includes wholesale business inventories, Retail Sales and University of Michigan's consumer sentiment index. Local and US Equity market activity will continue to be a barometer to movements on the Aussie dollar in the week to come - we can expect upward momentum to fuel gains in higher yielding assets at the expense of the greenback. Locally, key economic feedback includes NAB Business conditions, Westpac consumer confidence, Home loan activity and Unemployment data on Thursday which is likely to be a major market mover. The Australian economy is expected to 15,000 newly jobs created in the month of January, edging our unemployment rate up from 5.5 to 5.6 per cent.