Exchange Rates Forecast: US Dollar, Australian Dollar & New Zealand Dollar To Strengthen Following US Jobs Data

Modified: Monday, 9 December 2013 00:41 BST - Written by John Cameron

STORY LINK Exchange Rates Forecast: US Dollar, Australian Dollar & New Zealand Dollar To Strengthen Following US Jobs Data

Friday’s session in the global currency markets brought the publication of the US Non-Farm Payrolls data for November. The NFP figure is traditionally the premier data release of any month’s roster and the fact that this month’s edition came out significantly above the level anticipated by most analysts is likely to have far-reaching implications for several of the world’s leading currencies.

The headline data set from the States revealed that 203,000 new jobs were generated in the world’s leading economy last month – well ahead of the anticipated print of 185,000. Data showing the overall level of unemployment, published at the same time as the NFP print on Friday afternoon, could have an even greater bearing on the world’s major currencies in the short to medium term. The numbers revealed that the percentage level of unemployment in the States stands tumbled from 7.3% in October to 7.0% last month. This showing is particularly relevant given that the US Federal Reserve has suggested that it will be hiking interest rates if the overall level of joblessness drops to below 6.5% in the States. The figure also makes a near-term tapering of the Fed’s controversial Quantitative Easing programme more likely.

So what will this pair of jobs numbers from the States mean for some of the leading global currencies…?

The US DOLLAR (currency:USD) endured a day of indecision on Friday in spite of the positive domestic jobs numbers. Significantly the GBP USD exchange rate held below the 1.6400 level throughout the session and with Chicago Federal Reserve President Evans calling for Fed monetary policy to take into account structural changes to the American economy over the weekend, a winding down of QE appears likely in the very short term. Such a move will see the Greenback market outperform.

The AUSTRALIAN DOLLAR (currency:AUD) initially gave up ground following Friday’s US jobs data but as the afternoon progressed, the Aussie clawed back ground against Sterling, sending the GBP AUD exchange rate back down into the 1.7900s before the weekend shutdown. The medium term effect of the strong US jobs numbers is likely to bring a cut to QE and a renewed shift out of Aussie-denominated assets by investors.

The NEW ZEALAND DOLLAR (currency:NZD) continued its recent comeback against the Pound on Friday afternoon, sending the GBP NZD exchange rate down into the 1.9700s as the Kiwi rode the wave of positive investor sentiment. However, this move is likely to prove short-lived and the fall-out from the US labour market figures will almost inevitably bring a tightening of American monetary policy which will hurt the New Zealand unit, sending GBP/NZD higher.

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