Australian Jobs Broadly Beat Estimates Lifting Its Currency Value, BOE Eyed - 9.5.2013

The Australian dollar against the US dollar jumped sharply on jobs report earlier today from near lows around 1.0154 towards upside boundary at 1.0252, we will interestingly watch further upside attempts as prevailing trend is negative. Furthermore, exchange rate recovered losses from recent key rate cut with RBA president stating on Tuesday that “exchange rate has been little changed at historically high level”, it appears that unexpected monetary easing fails to devalue Aussie.

Aussie strength was generated by less than expected Unemployment rate in April, reported at 5.5% while market participants estimated 5.6%, also was lower than March rate at 5.6%. In addition the employment increased widely in April by 50.1K, beating estimates of just 11.5K increase, March figure was also positively revised from -36.1K to -31.1K. Stronger Aussie jobs report added to investors risk appetite following a fifth consecutive positive day in US S&P 500 index.

US equities have been driving recent rally in equities as S&P rose to new high at 1632.69 advancing by 0.41% in Wednesday session, Dow Jones Industrial Average rose by 0.32% remaining above unprecedented level at 15000. Nonetheless, Chinese CPI increase more than expected, from 2.1% in March to 2.4% in April increasing slightly concerns about China’s stimulus program possible constrains.

The sterling against the greenback recovered yesterday back to resistance at 1.5589 before it drops to 1.5532 today ahead of BOE decision for its monetary policy, expected to maintain asset purchases at £375B and key rate at 0.50%. The EURUSD was backed on Wednesday by stronger German industrial production, advancing as high as 1.3193. Today we will be watching mainly BOE decision and US Jobless Claims.