Dollar lacklustre before US jobs data
LTG Goldrock director Andrew Barnett said the dollar was trading in a narrow range before the release of US non-farm payrolls figures. "It's a bit lacklustre at the moment, it needs a bit of a catalyst one way or another," he said.
The US labour department will release non-farm payrolls figures for February early on Saturday (Australian time).
Economists expect the figures to show about 150,000 jobs were added to the US economy last month.
Mr Barnett said the dollar could continue to trade in its current range for the next week or so, before resuming its move lower.
"The Aussie dollar has sort of weakened recently but in the last few days there has been a few little tidbits of information to move it higher," he said.
"I do think in the next four to five weeks we will probably see some further weakness but right now we are just sitting tight."
Bond futures have weakened ahead of the release of the US employment data.
UBS interest rate strategist Matthew Johnson said it was unusual for bond futures to move significantly in the lead-up to the figures.
Mr Johnson said the move lower may be a sign traders were not properly positioned. He said bond futures had been facing downward pressure in the past week.
"Global investors just aren't buying as many of our bonds as they were so to get the buyers back you've got to cheapen them up a little bit."
The March 10-year bond futures contract was trading at 96.48 (implying a yield of 3.52 per cent), down from 96.59 (3.41 per cent) on Thursday.
The three-year contract was at 97.07 (2.93 per cent), down from 97.14 (2.86 per cent).
Frequently Asked Questions about this Article…
The Australian dollar was almost unchanged late on Friday, trading at about US102.43¢ (up slightly from US102.40¢ on Thursday) and moving in a narrow range as markets awaited key US employment figures.
LTG Goldrock director Andrew Barnett said the dollar was trading in a narrow range and needed a catalyst one way or another, which made it feel 'a bit lacklustre' until the US non‑farm payrolls provided fresh direction.
The US Labor Department was due to release non‑farm payrolls for February early on Saturday (Australian time), and economists were expecting roughly 150,000 jobs to have been added in the month.
According to the article, the US jobs report is a likely catalyst: a stronger or weaker-than-expected non‑farm payrolls reading could push the dollar out of its recent narrow range and influence AUD direction, at least in the short term.
Bond futures weakened before the release. The March 10‑year bond futures contract was trading at 96.48 (implying a yield of 3.52%), down from 96.59 (3.41%) on Thursday, while the three‑year contract was at 97.07 (2.93%), down from 97.14 (2.86%).
UBS interest rate strategist Matthew Johnson said it was unusual for bond futures to move significantly ahead of the figures and suggested the move lower may indicate traders were not properly positioned, noting downward pressure on bond futures over the past week.
The article suggests markets were range‑bound ahead of the report and that the jobs data could act as the catalyst to move prices. Andrew Barnett said the Aussie could continue trading in its current range for a week or so before resuming a move lower, so short‑term volatility is possible.
Everyday investors can monitor the US non‑farm payrolls as a potential catalyst for AUD and bond moves, watch bond futures/yields for signs of shifting demand, and be aware of commentary (like that from Barnett and Johnson) indicating possible short‑term range trading followed by further weakness in the weeks ahead.
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