Reuters: US Dollar Report: FOREX-Antipodean currencies take centre stage on strong jobs reports

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FOREX-Antipodean currencies take centre stage on strong jobs reports May 9th 2013, 03:11 Wed May 8, 2013 11:11pm EDT * Aussie and Kiwi lifted by surprisingly strong jobs numbers * Euro buoyed by German data * Dollar shy of 100 yen as Japanese investors buy domestic stocks By Sophie Knight and Ian Chua TOKYO/SYDNEY, May 9 (Reuters) - The Australian and New Zealand currencies bounced on Thursday after both countries posted stellar jobs data, while the euro held near a one-weak high against the dollar after upbeat German factory activity bolstered sentiment. Investors drove the Aussie up 0.7 percent to $1.0245 after data showed jobs surged by 50,100 jobs in April, well above an average estimate of 12,000 found in a Reuters poll. The move helped it recover from a two-month low of $1.0155 struck on Tuesday, after the central bank cut interest rates to a record low. The Kiwi also rose over half a U.S. cent to $0.8456 , jumping as high as $0.8470, following a surprisingly strong quarterly jobs report. It pulled away from a trough of $0.8360 plumbed on Wednesday after the central bank confirmed it had intervened to cap what it saw as an overvalued currency. "The employment data was a catch-up with the rest of the data. The rest of the economy was doing well and the employment data was the outlier. It's now more consistent with other data we've had from New Zealand," said Bill Diviney, currency strategist at Barclays. Diviney added that the Reserve Bank of New Zealand would have to meet strict criteria to intervene on a larger scale, such as the exchange rate being unjustified by fundamentals. "If you look at the yield differential between New Zealand and the U.S., the kiwi is trading in line with that. I think it would be difficult for them to make a case." The euro traded at $1.3163, after rising as far as $1.3195 overnight. Initial resistance is seen around the May 1 peak of $1.3243, with a break there taking it back to levels not seen since February. Investors warmed to the common currency after German industrial output unexpectedly jumped in March, fanning hopes that Europe's top economy is gaining traction. "The single currency has perhaps been the biggest beneficiary of the improving economic data out of Germany," said Stan Shamu, market strategist at IGMarkets. "When ECB President Mario Draghi cut rates last week, he emphasised the ECB is ready to do more should economic data continue to deteriorate. As a result, the German data saw EUR/USD spike to $1.3195." The move also came after a European Central Bank Executive Board member said the bank was not a "toothless tiger" and still had tools to deploy should the euro zone continue to worsen after last week's cut in interest rates to a record low. Against the yen, the common currency dipped 0.1 percent to 130.12, but held near a three-week high of 130.43 hit on Wednesday. The dollar also pulled back against the Japanese currency, dropping 0.2 percent to 98.82 yen. Some analysts say the greenback's inability to pierce the 100 yen level over the past few weeks is a result of Japanese investors purchasing yen to buy domestic stocks as the Nikkei index shoots to five-year highs. The dollar has trodden water against the yen for the past month, after surging against the yen on April 4, when the Bank of Japan launched an audacious monetary easing programme. The Nikkei has shot up 13.8 percent since then, and is up 66 percent since mid-November. "Whereas for much of this rally it was exporters doing well on expectations of a weaker yen, the market is now starting to price in domestic growth prospects, not just the outward-oriented parts of the Nikkei," Barclays' Diviney said. Link this Share this Digg this Email Reprints

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