Strong US Jobs Data had Little Effect on Markets Amid Coronavirus Concerns

. 2 min read

The AUDUSD opens at 0.6675 (mid-rate) and the NZDUSD opens at 0.6403 (mid-rate) this morning.

Stronger than expected US jobs data had little effect on markets amid growing concerns over the economic ramifications of the coronavirus outbreak.

Late on Friday, the US Department of Labor reported employment jumped by 225k jobs in January following an upwardly revised increase of 147k in December. Economists had forecast a 160k jobs increase in January following on from December’s previously reported 145k jobs rise. Despite strong job growth the report also showed the unemployment rate unexpectedly inched up to 3.6% from 3.5% in December.

Following two consecutive days of gains, global equity markets along with risk-linked currencies sold-off on Friday as investors focused on the long term negative effect on the global economy. China currently accounts for 16.3% of the world’s GDP and should the current confinement measures in China stay in place until the end of February, early estimates point to a reduction of global real GDP of 0.8% in Q1 and 0.5% in Q2.

The key driver for the NZD this week will be Wednesday’s RBNZ monetary policy statement. We expect the Reserve Bank to keep rates on hold with the tone of the accompanying statement to dictate direction for the NZD.

The AUD will be dictated to by offshore events including Federal Reserve Chairman Jerome Powell’s testimony on monetary policy in the early hours of Wednesday morning.

Global equity markets with the exception of the Shanghai sold-off on Friday - Dow -0.94%, S&P 500 -0.54%, FTSE -0.51%, DAX -0.45%, CAC -0.14%, Nikkei -0.19%, Shanghai +0.33

Gold prices were little changed on Friday closing out the week at $1,569 an ounce. WTI Crude Oil prices continued to slide on Friday, down 0.4% closing out the week at $50.55 a barrel.

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