Strong US payroll data in November where 211000 jobs were added point to further support for Fed lifting US rates next week. The median jobs forecast called for 200000 new jobs which suggests that unemployment rate remains on track at 5%.
is the aussie overvalued?
Aussie dollar at 73 US cents seems to be overvalued given the fall in the commodity prices. The better than expected GDP data resulted in the dollar gaining ground last week; however with the strong US jobs data and imminent US rate rise expectations, it is likely that the shine on the dollar will come off. One of the reasons where the local currency has found strength is in M&A activity.
YUAN TO JOIN IMF RESERVE CURRENCY BASKET
As expected, the IMF announced last week that the Chinese Yuan will be admitted in the basket of reserve currencies joining the US Dollar, the Euro and the Yen from October next year.
draghi qe announcement disappoints markets
ECB cuts deposit rate by 10 basis points and extends QE to March 2017 or beyond. The move is to boost the European economy to push inflation towards 2%. The market reaction to Draghi’s Euro 60b per month asset purchase program which remained unchanged was disappointing. The Euro soared against the dollar and in the cross rates, the Aussie euro rate fell back from 68 to 66 euro cents.
MARKET UPDATE
| Australia Cash rate Australia 90 day bank bill Australia 10 y bond US 10y Govt bond AUD/USD AUD/EUR AUD/JPY AUD/CNY ASX 200 S&P 500 Dow Jones Shanghai Composite Brent Oil (USD per BBL) Gold Spot (USD per oz) | This week 2.00 2.3033 2.937 2.2693 0.7322 0.6693 89.74 4.6837 5151 2049 17477 3584 42.80 1084 | Last week 2.00 2.27 2.85 2.22 0.7227 0.6813 88.60 4.6203 5202 2090 17798 3436 41.71 1056 |
OUTLOOK FOR THIS WEEK
Australian labour market data is due to be released later this week. But all eyes really on next week’s FOMC meeting on 15 and 16 December where it is widely tipped that Governor Yellen will increase US cash rates for the first time since 2008.
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