Intraday Market Thoughts

Dollar Days Continue, Australian Jobs Next

by Adam Button
Nov 5, 2014 23:04

Even modestly good news is a reason to buy the US dollar in this market as it roared again Wednesday on US election results and a mixed bag of economic data. The loonie edged out USD as the best performer on a rebound in oil while the Australian dollar lagged badly. The Aussie will remain in focus with jobs numbers due later.  The Premium $AUDUSD short picked 2 months finally hit its final target today at 0.8570 for 340 pips gain.  Both USDCAD Premium trades were filled and in the money, alongside alongside the 2 USDCHF Premium trades as EURCHF nears 1.20. All details of the Premium trades are in the Premium Insights.

Republicans winning control of the US Senate was listed as at least an 8-to-1 likelihood on betting sites and yet it sparked an across-the-board USD rally Wednesday. USD/JPY ran to 114.80 from 113.60 with most of the USD gains coming before New York traders arrived.

The market then turned to the ADP employment report. It showed 230K jobs compared to 220K expected; the prior report was also bumped up by 12K jobs. That wasn't strong enough to keep the momentum going and the dollar edged back.

Later, the ISM non-manufacturing index slipped to a four-month low of 57.1 compared to 58.0 expected. Within the report, however, the employment component rose to a 9-year high and that kept US dollar selling to a minimum.

Oil was volatile. It sank in early trading but rumors of a Saudi pipeline explosion caused a violent round of short covering to $79 in WTI. That lowered USD/CAD to 1.1392 from as high as 1.1466.

The pound was volatile and fell to 1.5969 after the soft UK services PMI but talk of M&A related boosted it all the way back to 1.5998. We emphasize, once again, the strong performance of sterling ex-USD over the past month.

The big loser on the day was the Australian dollar, down 1.5 cents. The moves weren't tied to anything in particular or easily identifiable and came well-after the RBA yesterday.

The Aussie will stay in focus with jobs data due at 0030 GMT. The market is ultra-skeptical of Australian employment data at this point but the consensus is +20K with the unemployment rate ticking to 6.2% from 6.1%. As always, watch the full-time/part-time breakdown.

Act Exp Prev GMT
ADP Employment Change (OCT)
230K 220K 225K Nov 05 13:15
ISM Services (OCT)
57.1 58.0 58.6 Nov 05 15:00
Markit Services PMI (OCT)
56.2 58.5 58.7 Nov 05 9:30
Markit PMI Composite (OCT)
57.2 59.0 Nov 05 14:45
Markit Services PMI (OCT)
57.1 58.9 Nov 05 14:45
Employment Change s.a. (OCT)
10K -29,700 Nov 06 0:30
Fulltime employment (OCT)
21,600 Nov 06 0:30
Part-time employment (OCT)
-51,300 Nov 06 0:30
Unemployment Rate s.a. (OCT)
6.1% 6.1% Nov 06 0:30

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