AUD/USD falls further to near 0.6680 as US Dollar outperforms, US NFP data eyed

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.07%	0.19%	0.39%	0.08%	0.24%	0.38%	0.03%
EUR	-0.07%		0.12%	0.33%	0.01%	0.18%	0.32%	-0.03%
GBP	-0.19%	-0.12%		0.21%	-0.11%	0.05%	0.19%	-0.16%
JPY	-0.39%	-0.33%	-0.21%		-0.31%	-0.15%	-0.02%	-0.37%
CAD	-0.08%	-0.01%	0.11%	0.31%		0.16%	0.29%	-0.05%
AUD	-0.24%	-0.18%	-0.05%	0.15%	-0.16%		0.14%	-0.21%
NZD	-0.38%	-0.32%	-0.19%	0.02%	-0.29%	-0.14%		-0.35%
CHF	-0.03%	0.03%	0.16%	0.37%	0.05%	0.21%	0.35%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Investors will closely monitor the US NFP data to get fresh cues on the Federal Reserve’s (Fed) monetary policy outlook. The commentaries from Fed officials over the last six months have signaled that they are more concerned about weak job market conditions than inflation remaining above the 2% target.

Economists expect US employers to have created 60K fresh jobs, slightly lower than 64K in November. The Unemployment Rate dropped to 4.5% from the prior reading of 4.6%. Meanwhile, Average Hourly Earnings data, a key measure of wage growth, is expected to have grown at an annualized pace of 3.6%, faster than 3.5% in November. Month-on-month Average Hourly Earnings are estimated to have risen at a faster pace of 0.3% against the prior reading of 0.1%.

In addition to the US Dollar’s strength, weakness in the Australian Dollar (AUD) has also weighed on the Aussie pair. The antipodean is under pressure as investors have pared Reserve Bank of Australia (RBA) hawkish expectations for the February policy meeting, following the release of soft Consumer Price Index (CPI) data for November.

Investors reduced the risk of a rate hike from the Reserve Bank of Australia in February to just 24%, Reuters reported. In November, Year-on-year (YoY) inflation dropped to 3.4% from estimates of 3.7% and the October reading of 3.8%.

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Why it matters to traders?

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.