Nonfarm payrolls rose 211,000 last month, the U.S. Labour Department said on Friday. September and October data was revised to show 35,000 more jobs than previously reported. The unemployment rate held at a 7 ½ year low of 5.0 percent, as people returned to the labour force in a sign of confidence in the jobs market. However, the greenback failed to keep gains from the initial reaction after the positive data, weighed down by the ECB disappointment on Thursday.
The Euro strengthened 3.34% against the greenback on Thursday when the ECB under-delivered by announcing that the QE program would now last until March 2017 and did not increase monthly purchases, as was widely expected. Furthermore, the deposit rate was cut by only 10 basis points to -0.3%, while investors had expected the rate would go to -0.4%.
Meanwhile, the Bank of Japan (BOJ) Governor Kuroda said this morning that he saw no need to implement negative deposit rates in Japan as borrowing costs were already very low due to the BOJ’s aggressive asset purchases. From the yen point of view, Japan’s final readings of GDP for the third quarter are due on Tuesday, along with the GDP deflator and trade balance.
The Kiwi was one of the strongest performers against the greenback last week. A disappointing week for the US dollar came to a close with a 3.28% weekly gain for the pair NZD/USD pair. Strong domestic data and business confidence in New Zealand helped to overshadow its US counterpart and boosted expectation that the Reserve Bank of New Zealand (RBNZ) may put further easing on hold at next month’s meeting. Meanwhile, markets are pricing in a 50% chance that the RBNZ will cut the cash rate to 2.50% on Thursday, as weak consumer price inflation persists and renewed weakness in dairy prices dampens the economic outlook.
As there are nearly no US macro-economic figures this week, apart from Friday’s US retail sales and consumer confidence, the markets will most likely be preparing for the next week’s Federal Open Market Committee meeting.
Top News This Week
NZD: Official Cash Rate. Wednesday 10th December, 4.00am.
I expect figures to come in at 2.50% (previous figure was 2.75%).
USD: Retail Sales m/m. Friday 11th December, 9.30pm.
I expect figures to come in at 0.3% (previous figure was 0.1%).