Dollar up off Spain
The Australian dollar has risen three-quarters of a US cent with better than expected jobs figures giving investors reason to be optimistic about the US economy and Spain agreeing to austerity measures needed to get aid.
At 0700 AEST on Monday, the Australian dollar was trading at 105.70 US cents, up from 104.95 cents on Friday.
On Friday, the US Labor Department non-farm payrolls report said there were 163,000 jobs added to the American economy in July and the jobless rate ticked up a tenth of one per cent to 8.3 per cent.
Market forecasts were for a gain of 100,000 jobs in the month and the unemployment rate to be 8.2 per cent.
Meanwhile, Spain said it was open to new austerity measures, including stopping Christmas bonuses for public servants, to allow it to receive financial help from the European Central Bank (ECB).
Westpac New Zealand senior market strategist Imre Speizer said two catalysts helped the Australian dollar and global equity markets.
“Just before the US payrolls came out, the Spanish prime minister gave a speech and said the (financial) rescue has been given consideration but no final decision has been made,” Mr Speizer said from Auckland.
“The fact that it is being discussed means that a rescue is not that far off.”
Mr Speizer said the surprisingly good US jobs report fuelled the second half the Australian dollar’s rally on Friday night and Saturday morning, Australian time.
He said this would be a big week for Australian economic events with the Reserve Bank of Australia’s (RBA) interest rate decision on Tuesday and the the release of its Statement on Monetary Policy on Friday.
“We’re not expecting a rate move but will be looking for guidance on when the next rate cuts will come,” Mr Speizer said.
The Australian Bureau of Statistics (ABS) will release employment data for July, with the market forecasting total employment to rise by 10,000 in the month, unemployment to rise to 5.3 per cent, from 5.2 per cent in June.
Mr Speizer said he expected the Australian dollar to move higher, above 105.70 US cents, during the local session on Monday.
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