Dollar higher after weak US data

 

coinjar,money,dollar,coin,jarThe Australian dollar is higher against a much weaker US dollar after the release of a disappointing US employment report.

At 0700 AEDT on Wednesday, the local unit was trading at 97.09 US cents, up from 96.55 cents on Tuesday.

In overnight trade, the currency peaked at 97.32 US cents, its highest level since June 4.

The nonfarm payrolls report, out overnight, showed the US economy added 148,000 jobs in September, well below the gain of 180,000 the market was expecting.

The data increased expectations the US Federal Reserve won’t wind back its economic stimulus program until next year.

Forex.com senior currency strategist Eric Viloria said the data caused a selloff in the greenback, which gave the Australian dollar a boost.

“The lacklustre payrolls data suggests that the Fed is more likely to delay tapering until at least early next year,” he said.

“Therefore, the Fed’s balance sheet will continue to expand at a tremendous pace of $US85 billion per month and the US dollar is likely to remain under pressure.”

On Wednesday, the Australian Bureau of Statistics will release inflation figures for the September quarter, which are expected to come in below the Reserve Bank of Australia’s two to three per cent medium-term target range.

Market forecasts are for the headline consumer price index (CPI) to have rise 0.8 per cent in the quarter and by 1.8 per cent in the year to September.

However, Viloria said the figures won’t spark a November an RBA interest rate cut.

“The two to three per cent area is an average and does not represent a band that the RBA must hold at all times,” he said.

“If CPI slows by more than expected, the Australian dollar is likely to come under pressure as easing expectations build, while a stronger-than-expected reading may give it a boost.”

AAP

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