Dollar keeps climbing solidly with job market recovery

December 4, 2014

The ADP job reports showed that the US job market is in a steady recovery. Although the November reading of 208,000 was still lower than 222,000 which was the expected number, it was still the six consecutive month in which more than 200,000 jobs was increased.

The dollar index retreated a little right after the release of the reports, but kept rising afterwards to the new recent high as Euro refreshed low. Euro Dollar broke the 1.2360 support and closed at 1.23 this morning as the Euro area composite PMI declined to 51.1, the lowest in 16 months. The data, according to Markit, implied that the economy may just grow 0.1% in the fourth quarter.

UK economy, on contract, is still in a fast track. The service PMI rose to 58.6 in December from 56.2. Also, the growth prospect of 2015 was revised to 2.4% from 2.3%. Those helped Sterling rebound from bottom 1.56. Nevertheless the bearishness remains.

Aussie Dollar hit a new low to 0.8388 as Australian Q3 GDP grew 0.3%, which was lower than expected 0.7% expansion, and lower than the previous reading of 0.5%. The data increased the speculation on potential rate cut from RBA in next year. Technically, the medium-run target of AUDUSD is 0.8150.

Most stock markets were rising despite the weaker global economy. The Shanghai Composite gained 0.58%. ASX 200 also rebounded 0.77% to 5321. The Nikkei Stock Average was up 0.32%. In the European stock markets, the UK FTSE lost 0.38%, the German DAX was up 0.30% and the French CAC Index advanced 0.1%. US market broadly rose as well, and Dow refreshed at an all-time high. The S&P 500 added 0.37% to 2065. The Dow closed 0.37% to 17920, and the Nasdaq Composite Index rose 0.39% to 4774.

On the data front, Australia Retail Sales and Trade Balance will be released at 11:30 AEDST. China official Non-Manufacturing PMI and HSBC Services PMI will be at noon. Both BOE and ECB will release their rate decisions. US Unemployment Claims will be at 0:30 AEDST.

Have a great trading day!

Anthony


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