fxmatters

We come around once more to the monthly US jobs data. In fact we are moving into a period where news in several places have the potential to surprise (e.g. US data, RBA meeting and data, G20 finance ministers meeting next weekend, RBNZ meeting next week) – see calendar). But first the US labour market: the jobs growth in April was the largest since March 2006. The May growth will be a lot more, partly the result of temporary employment on the US Census, but maybe also enough to nudge the US unemployment rate a little further below 10%. Significantly, further evidence of a turnaround in the US jobs market will be the trigger for the US Fed to step up the tightening process and herald a period of US strength. The euro is already coming under pressure and strong US data would likely tip the balance further. Meanwhile in Australia the RBA are likely to refrain from another rate hike Tuesday, taking some of the sting out of the AUD as well. This mix of forces increases the odds that the NZD/USD stays around the mid 60s – or lower – having recently broken below the range of the previous six months.