The Australian Dollar hit a 2-year low against its US namesake in Asian trade. All eyes now turn to US jobs data and its implications for Fed “taper” speculation.

Talking Points

Australian Dollar Sinks on Two-Year Low on RBA Rate Cut Speculation
US Dollar to Rise if Jobs Data Outperforms, Reinforcing Fed Taper Bets

The Australian Dollar underperformed in otherwise quiet overnight trade, sliding as much as 0.4 percent on average against the majors and hitting a two-year low against its US namesake, as a soft set of second-quarter PPI figures reinforced the likelihood of an interest rate cut at next week’s RBA monetary policy meeting. Wholesale prices grew 0.1 percent from the prior quarter, marking the smallest increase since the first quarter of last year. Traders are now pricing in a 91 probability of another 25bps reduction in the benchmark lending rate.

Looking ahead, all eyes are on the US Employment report. The closely-watched Nonfarm Payrolls data point is expected to show the economy added 185,000 jobs in July, down a bit from the 195,000 increase recorded in the prior month. Recent US economic data has outperformed relative to expectations, opening the door for an upside surprise. Such an outcome is likely to boost the US Dollar as traders take signs of firming recovery as reinforcing the likelihood of a reduction in Federal Reserve stimulus efforts at September’s FOMC meeting.

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Asia Session:

GMT

CCY

EVENT

ACT

EXP

23:50

JPY

Monetary Base (YoY) (JUL)

38.0%

–

36.0%

23:50

JPY

Monetary Base – End of Period (JUL)

¥173.3T

–

¥173.1T

1:30

AUD

Producer Price Index (QoQ) (2Q)

0.1%

–

0.3%

1:30

AUD

Producer Price Index (YoY) (2Q)

1.2%

–

1.6%

Euro Session:

GMT

CCY

EVENT

EXP/ACT

IMPACT