Markets Take a Breather, Soft Kiwi Jobs

Price action was tame on Wednesday as markets took a break following weeks of major volatility. The yen was the best performer while the Aussie lagged. The kiwi dollar fell hard early in the session and Australian employment is up next. Latest EURUSD CHART from Ashraf is here

It was a day of minimal news and economic data. The highlight was the Canadian Ivey PMI which rose to 58.9 compared to 53.9 expected. The surprise weighed on USD/CAD as it rejected parity once again and fell to a two-week low.

In European trading, BOC governor Carney will speak to UK parliament about his upcoming role as leader of the Bank of England. The risks are primarily to GBP and the market may be prone to overreacting as traders feel out the new governor.

Trading in Asia got off to a fast start as the New Zealand dollar dropped a half cent to 0.8375 following the Q4 jobs report. Although the unemployment rate dropped to 6.9% from 7.3%, the market focused on the overall level of employment, which fell 1.0% in the quarter compared to a 0.4% rise expected.

The next risk event is the Australian January employment report at 0030 GMT. The consensus is for 6K new jobs after 5.5K were lost in December. The unemployment rate is expected to tick up to 5.5% from 5.4%.

AUD/USD is in a precarious position after falling to a 10-week low on Wednesday. A decline below the mid-November low of 1.0287 (which is a near certainty on a weak report) could send the market scrambling to dump Aussie dollars.