The Aussie has been boosted overnight by the rise in employment, allowing a push back above the 0.82 level on AUDUSD. This follows on from yesterday’s fall on the back of copper prices. This neatly highlights the competing forces on the currency, namely a still buoyant domestic economy which has served to underpin the Aussie, together with a weaker but still evident correlation with commodities. Talking of which, oil prices recovered late yesterday towards the 48 level, but at the same time the FT reports that there are many new projects within the industry being cancelled because of it, which is not in the least bit surprising.
The main issue yesterday was the soft retail sales data in the US, which initially weakened the dollar, but most of this was given back towards the end of the session. For the moment, we remain in the middle ground of having seen the dis-inflationary impact of falling oil prices, but less of the impact on demand via higher spending on other items. This will be where investors will be watching in the coming weeks, because it is where many central bankers and policy makers are spinning the positive impact of falling energy prices. Today we see PPI data in the US, together with the usual weekly claims data.
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