Dollar lower ahead of jobs figures

THE Australian dollar is nearly a third of a US cent lower ahead of the release of key monthly employment figures.

At 0700 AEST today, the currency was trading at 101.71 US cents, down from 102.01 US cents yesterday afternoon.

Westpac New Zealand senior market strategist Imre Speizer said the Australian dollar traded in a fairly narrow range overnight with positive global sentiment preventing it from falling below the 101.55 US cent level it dropped to in the wake of Tuesday's interest rate cut.

"It's been stuck just above that level and it is probably being held by the global market sentiment which is pushing equity markets higher," he said.

The Reserve Bank of Australia cut the cash rate to a record low of 2.75 per cent at its monthly board meeting, which reduced demand for the currency.

Mr Speizer said the main driver for the currency today would be the release of the Australian Bureau of Statistics' labour force figures for April at 1130 AEST.

An AAP survey of 14 economists shows a median forecast for the unemployment rate to be steady at 5.6 per cent for April with total employment growing by 11,000.

He said the currency was likely to move higher if the data showed stronger-than-expected jobs growth and fall if the figures were weaker than expected.
 

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Dollar higher after US job figures

THE Australian dollar has pushed above 103 US cents on news of improvements in the US jobs market.

At 0700 AEST today, the currency was trading at 103.08 US cents, up half a cent from 102.54 US cents on Friday afternoon.

BK Asset Management managing director Kathy Lien said the Australian dollar rallied on Friday night after US economic data showed the country's unemployment rate fell 0.1 per cent to 7.5 per cent in April.

The figures were better than markets had expected and saw US stocks rally sharply, with the Dow Jones Industrial Average pushing above 15,000 points for the first time in its history. However, it dropped back to close at 14,973.96

But, Ms Lien, said the currency continued to face downward pressure amid speculation the Reserve Bank of Australia could cut the cash rate, currently at three per cent, when it meets on Tuesday.

She said that even with Friday night's rally, the Australian dollar finished below where it started the week and could suffer further weakness over the next few days.

Australian retail sales, trade and employment data this week could weigh on the currency, she added.

"We are looking for softer numbers all round which may make it very difficult for (the Australian dollar) rally to extend above 104 US cents," she said.

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Dollar higher on Capex figures

THE Australian dollar is higher after official figures indicated the mining investment boom might peak later than expected.

At 12pm AEDT today, the currency was trading at 102.43 US cents, up from 102.16 US yesterday afternoon.

The currency slumped as low as 101.84 US cents early this morning, its lowest point since early October, before recovering as global share markets posted solid gains.

CMC foreign exchange dealer Tim Waterer said the Australian dollar was subdued this morning ahead of the release of official capital expenditure figures.

He said the currency lost around a quarter of a US cent after the Australian Bureau of Statistics figures showed a drop in spending in the December quarter but soon recovered.

"Initially, we had a move lower on the headline figure but it rebounded once people looked deeper into the numbers," Mr Waterer said.

The figures for expected capital spending in the 2013/14 financial year indicate the mining investment boom will peak later than expected.

Mr Waterer said those better-than-expected figures prompted the currency's participation in a rally of risk assets underway during the Asian session.

"Leading into the numbers, there was a fear it could be a bit of a disappointing result. But, what eventuated wasn't terribly great but certainly didn't justify any further weakness in the currency," he said. "The fact it wasn't as bad as it could have been has allowed the Australian dollar to progress higher, with other risk sensitive currencies."

He said the Australian dollar would likely continue to move higher this afternoon and evening.

Meanwhile, Australian bond futures prices were lower at noon. At 12pm AEDT today, the March 10-year bond futures contract was trading at 96.665 (implying a yield of 3.335 per cent), down from 96.690 (3.310 per cent) today. The March three-year bond futures contract was at 97.260 (2.740 per cent), down from 97.290 (2.710 per cent).

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