Posted: 10 Dec 2009 04:28 AM PST

Australia’s job market gained jobs for a third straight month, beating expectations once again. These results pushed AUD/USD higher, after being blown by the American Non-Farm Payrolls on Friday. The Australian and American fundamentals continue to remain very different.

Image credit: Martin Kingsley on Flickr

Australian employment change came out far better than expected: a rise of 31,200 jobs, instead of 5,300 net gains that were expected. This is 6 times the early expectations. This adds to last month’s rise of 27,200 jobs. This figure was revised upwards from the initial release. Also the previous month saw a big gain, of 40,000 jobs.

Also the unemployment rate surprised economists: it fell from 5.8% to 5.7%, while it was expected to tick up to 5.9%. All these numbers show great strength for the Australian economy, and set the path for another rate hike – the fourth in a row, in the next RBA meeting.

The Aussie gained on this release: AUD/USD rose from 0.9090 to 0.9160 instantly, and held these gains. The Aussie also gained against other currencies.

The Australian dollar was one of the “victims” of the recent American Non-Farm Payrolls report, which sent the greenback up across the board. The high yielding, carry-traded Aussie was abandoned on the good American data.

This report from Australia puts things in proportion once again. The US is losing jobs for almost two years. No gains were reported – only a smaller-than-expected loss of jobs. Unemployment rate in the US fell back to…10%, while Australia’s rate is under 6%.

The Non-Farm Payrolls also created hopes for a rate hike in the US. These hopes were shattered in Bernanke’s speech on Monday. Australia’s interest rate is at 3.75%, and expected to rise soon, not at an extended period of time.

I continue to be bullish on the Aussie. It’s summertime in the land down under…

Trade together with Currensee

Forex Daily Outlook – December 10th 2009

Posted: 09 Dec 2009 02:27 PM PST

Get ready for one of the busiest days: rate decisions in Britain and Switzerland, employment numbers in the US and Australia, and much more. Here goes:

Australia’s MI Inflation Expectations start the day with an expected steady rise. This is only a warm up to the bigger release: the employment numbers. Australia’s Employment Change is predicted to rise by 5.3K, much less than last month’s 24.5K. Looking at previous releases, this number can sure be better.

The Australian Unemployment Rate is expected to rise to 5.9%, but also here, it never made it above 5.8%, contrary to economists’ expectations. After these figures are released, RBA Assistant Governor Guy Debelle will make a public appearance and might shake the Aussie as well.

For more on the Australian dollar, read the AUD/USD forecast.

In Europe, French Industrial Production is predicted to rise by 0.6%, after falling last month. German Industrial Production disappointed earlier this week. Later in Europe, the ECB Monthly Bulletin will give a broad look at the economy, now that Greece is in trouble. Casey Stubbs talked about the downside risk for the Euro already on Sunday.

For more on the Euro, read the EUR/USD forecast.

In Switzerland, the quarterly rate decision isn’t expected to bring a rate hike. The Libor Rate is predicted to remain at 0.25%. Traders’ focus will be on the SNB Monetary Policy Assessment and the accompanying SNB Press Conference.

In March, the SNB intervened in the markets and sent the Swissy up – only temporarily. With the weakening Euro, the SNB might intervene again to hold EUR/CHF above the support line that it created: 1.50. Will they intervene again?

The rate decision in Britain is also expected to be interesting, very interesting. The troubled British economy isn’t expected to receive a rate hike, and the Official Bank Rate will probably stay at 0.5%.

As in previous months, the focus will be on the QE program, and the expansion of it. The Quantitative Easing program, also known as Asset Purchase Facility, is expected to remain unchanged at 200 billion Pounds, after it was enlarged at a smaller-than-expected scale last month.

More information about the British economy will be released in the MPC Rate Statement. I find hope for the British economy in the NIESR GDP estimate, which was positive for a change.

Moving to North America, we have a double-feature Trade Balance release. Canada’s Trade Balance is expected to show a smaller deficit – only 0.6 billion. On the other side of the border, the American deficit is predicted to rise to 37 billion.

Canada enjoyed good housing figures this week, which held it strong, although the rate decision didn’t bring any news. For more on the loonie, read the Canadian dollar forecast.

Less than a week after the excellent Non-Farm Payrolls, weekly Unemployment Claims are expected to show a renewed rise in claims – 465K. This could be better.

Near the end of the day, the Federal Budget Balance will be released, and it’s expected to show a smaller deficit: “only” 136 billion.

That’s it for today. Happy forex trading!

Trade together with Currensee

Not the Pound’s Darling (2)

Posted: 09 Dec 2009 08:44 AM PST

Alistair Darling’s pounded the Pound once again. The “supertax” on bank bonuses distracted the markets for a short time, until the pre-budget was fully digested. The gloomy picture drawn in the report sent the Pound down across the board, a day before the rate decision.

The Distraction

Alistair Darling, the Chancellor of the Exchequer in Britain (or treasury minister if you wish), went to parliament to present the annual budget for 2010. The big news was the news “supertax” on bank bonuses – a 50% taxation on bonuses above 25,000 pounds.

This announcement addresses public anger about the huge bonuses taken by bank managers. The public rage continues also across the Atlantic, where senior American bankers take home a lot of bonus money while their institution begs for taxpayers money.

While this announcement easily caught the ears of the press, and is interesting, this super tax isn’t that important for forex traders.

Darling on the British economy and debt

Darling also addressed the whole economy. The first headline was that the growth forecast for 2010 would remain 1-1.5%. No change means no news, right? This was followed by a forecast for 2011 – 3.75% growth rate. Wonderful! But Darling may be out of office by then. Elections are due in Britain next year, and he may need to search for another job, even if the Labor Party forms the next government.

The news is in the near future: Darling downgraded the forecast for 2009, which is about to end – a contraction of 4.75% is the new forecast, replacing the 3.75% forecast. This was one weight on the Pound.

The second weight on the Pound is the budget. He didn’t address the growing deficit problem. It’s hard to do that on an election year. The market expected him to address this issue and spend less. More spending means a devalued British Pound.

Market Reaction – Pound is pounded, but slowly

GBP/USD fell from 1.6350 to a 1.6223 at the time of writing. It took some time for this move happen, about three hours. Below 1.6260, the next support line for cable is at 1.6110.

GBP/JPY fell from 144 to 1.42.50. GBP/CHF fell from 1.6775 to 1.6634. EUR/GBP rose from 0.9010 to 0.9085. This is especially notable since the Euro also has it’s own troubles: Greece and Spain are both suffering.

Tomorrow, the focus moves to Mervyn King, governor of the BoE. More about the rate decision and a deeper technical analysis can be found in the British Pound forecast.

Trade together with Currensee

Forex technikal and fundamental analysis

Dec 10, 2009

Forex Crunch US employment can envy Australia’s – it’s felt in forex

Forex Crunch US employment can envy Australia’s – it’s felt in forex

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