Surprise Aussie Jobs Drop, Spain & France Auctions Next

Australias jobs report missed expectations badly and New Zealand CPI was soft. The yen is off to a strong start to the day while AUD and NZD are the weakest performers. In Europe, the first true post-downgrade tests come with Spain and France borrowing long term. 9/13 Premium FX trades hit all targets based on a risk-on positioning.

The Australian dollar immediately fell a half-cent to 1.0380 after the December employment report showed a decline 29,300 jobs compared to the +10,000 consensus. However, the details of the report was far less worrisome than the headline and the aussie was able to recoup a portion of its losses. The miss was wholly due to a 53,700 decline in part time jobs; full-time employment climbed by 24,500 positions. The unemployment rate also fell to 5.2% from 5.3%.

The New Zealand dollar stumbled badly after Q4 CPI. NZD/USD dropped a half-cent to 0.8025 after Q4 CPI fell 0.3% compared to the +0.4% expected. Only a slight chance of a rate cut from the RBNZ this year was priced in prior to the meeting but that percentage is sure to increase and drag NZD lower.

European traders will be focused on a pair of debt sales. At 0930 GMT Spain will attempt to sell 5, 7 and 10-year notes. At 1000 GMT, France will auction a series of bonds extending from 2 to 29 years. Yields across the curve in France remain below 4% but even a slight stumble in a core European nation could crush the recent upward momentum in EUR. Spanish 10-years are currently yielding 5.1%.

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