Australian dollar reverses and drops sharply today as hit by poor employment data. The employment market unexpectedly contracted by -3.7k in January versus expectation of 15k growth. That's the second consecutive months of contraction with December figure revised down to -23k. Unemployment rate rose to 6.0%, up from 5.8%, versus consensus of 5.9%. That's the highest level since 2003. The data indicates that the underlying economy in Australian remains rather weak despite last week's sharp depreciation in the Aussie. Nonetheless, it should be noted that RBA has clearly stated its intention to keep rates unchanged for a period of time in the February statement. Thus in spite of today's fall, downside in Aussie could be limited in near term.
Meanwhile, Sterling is maintaining the post BoE inflation report gains. BoE's governor Mark Carney indicated yesterday that the central bank would leave the Bank rate unchanged for some time even after the unemployment rate has reached the 7% threshold. The central bank also delivered a more upbeat assessment over the economic outlook. While noting that any rate hike would be gradual, the central bank added that markets priced in a first hike in the second quarter of 2015. More in BOE Raised Economic Outlook, Reiterated Interest Rates to Stay Low.
Overall, the GBP/AUD is the strongest cross this week due to comparative strength. GBP/AUD drew strong support from 55 days EMA this week and rebounded strongly. A short term bottom should be in place at 1.8118. Nonetheless, it's just at around mid-point of recent range of 1.8118/9185. The consolidation pattern from 1.9185 could extend further sideway with another fall. Break of 1.9185 is needed to confirm up trend resumption. Or, we'd indeed stay neutral first in spite of this week's strong rebound.
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The main focus today will again be Fed chair Yellen's testimony, to Senate this time. Yellen is not expected to deviate from her testimony to House on Tuesday. More in Yellen Testified... Elsewhere, Japan domestic CGPI rose 2.4% yoy in January. Business NZ manufacturing index dropped to 56.2 in January. UK RICS house price balance dropped to 53 in January. German German CPI, Swiss PPI and ECB monthly bulletin will be released in European session. US will release retail sales, jobless claims and business inventories.