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Asian Session – Aussie jumps on strong jobs growth; dollar flat ahead of speeches by Fed officials

The Australian dollar jumped over 1% on Thursday after employment in Australia rose much more than expected. Employment in October increased by 58.6k against expectations that it would rise by 15k and was the biggest gain in 3½ years. The unemployment rate fell to 5.9% from 6.2% – the lowest since May 2014.

The aussie soared from 0.7059 against the US dollar to 0.7144 after the data as it lowered the probability that the Reserve Bank of Australia would make another cut to its cash rate anytime soon.

In Japan, core machinery orders posted a surprise rebound in September following three straight months of declines in the preceding period. Core machinery orders were up 7.5% month-on-month in September versus forecasts of a 3.3% increase.

The strong figure eases concerns that the Japanese economy may have fallen into technical recession in the third quarter of the year. Both exports and domestic consumption have been weaker-than-expected in recent months, putting pressure on the Bank of Japan to expand its quantitative easing program. However, at its last meeting, the Bank of Japan put back the timing of when it expects to hit its inflation target by six months, which dampened expectations of an imminent easing of monetary policy.

The US dollar was little changed against the yen on Thursday as it kept within yesterday’s tight trading range. It was slightly firmer in late Asian trading at 122.97 yen. Traders are likely to remain cautious ahead of speeches later in the day by several Fed officials, including Janet Yellen, at a conference on monetary policy in Washington DC.

The euro is also likely to come into focus today as ECB President Mario Draghi is due to speak at a hearing before the Committee on Economic and Monetary Affairs in the European Parliament. Investors will be watching whether Draghi will reveal anything about the ECB’s intentions at its next policy meeting in December, when it’s widely expected to announce new stimulus measures.

The single currency drifted lower in late Asian trading to fall to 1.0743 dollars. Against the pound, the euro was broadly flat around 0.7066.

Sterling gave up some of its earlier gains at the start of Asian session to decline from 1.5246 dollars to a low of 1.5197 before recovering just above 1.52 dollars.

In commodities, crude oil prices were trading near two-week lows on weak outlook for near-term demand. US oil futures were down slightly on yesterday’s close to trade at $42.95 in late Asian session. Gold prices were firmer though on Thursday and last stood at $1087.26.

Looking ahead to the rest of the day, Eurozone industrial production will be the main data in European session. ECB President Mario Draghi will give two speeches in the European Parliament at 08:30 GMT and 10:30 GMT. In the US session, the initial weekly jobless claims and the JOLTS job openings will be the only major data ahead of the speeches by Fed policymakers later in the day. Apart from Yellen, other speakers will include Bullard, Lacker, Dudley and Evans.

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