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Forex JPY flat ahead of jobs data, AUD steady before PPI

Published 05/01/2014, 07:20 PM
Updated 05/01/2014, 07:22 PM

Investing.com - The Japanese yen was nearly flat against the dollar on Friday ahead of jobs data and the Australian dollar was steady as well ahead of producer prices data.

USD/JPY traded at 102.31, down 0.02%, while AUD/USD held at 0.9271, down 0.02%.

China is on public holiday, but the rest of the region mostly re-open to mark the final day day of the week.

Japan's March unemployment rate at at 0830 Tokyo (2330 GMT) is forecast at 3.6%, matching February's figure which was the lowest reading since 3.5% marked in December 1997. Household spending is forecast at a gain of 1.0% in real terms from a year earlier, the first rise in two months after a decline of 2.5% in February.

At 1130 in Sydney (0130 GMT), Australia's Q1 PPI data is expected to show a 0.5% gain. The data is usually ignored by the market because CPI data for Q1 has been released.

Overnight, the dollar traded mixed against most major currencies as solid manufacturing data out of the U.K. sparked heavy demand for the pound, which came at the greenback's expense.

The pound hit five-year highs against the dollar after Markit Economics reported that its U.K. manufacturing purchasing managers’ index rose to 57.3 last month from 55.8 in March. Analysts had expected the manufacturing PMI to decline to 55.4.

Growth increased across the sector, as businesses reported gains in new orders, and new product launches. Manufacturers also took on more staff, with employment rising for the twelfth consecutive month.

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A recent string of upbeat reports about the U.K. economy has raised expectations the Bank of England could hike interest rates as soon as the first quarter of next year.

Meanwhile in the U.S., the Department of Labor reported that the number of individuals filing for initial jobless benefits last week rose by 14,000 to 344,000 from the previous week’s upwardly revised total of 330,000.

Analysts had expected jobless claims to fall by 11,000 to 319,000.

Offsetting the disappointing jobless claims figures, the Commerce Department reported earlier that U.S. personal spending rose 0.9% in March from an upwardly revised 0.5% the previous month, beating expectations of 0.6%.

Consumer spending is the single biggest component of U.S. economic growth, accounting for as much as two-thirds of economic activity.

The report added that personal income rose 0.5%, beating expectations for a 0.4% increase.

Separately, the Institute for Supply Management said its manufacturing PMI rose to 54.9 last month from 53.7 in March, outpacing expectations for a 54.3 reading.

The reports came one day after data showed that the U.S. economy expanded at an annual rate of just 0.1% in the first quarter, well below forecasts for an expansion of 1.2%, though markets attributed the poor showing to rough winter weather that disrupted commerce earlier this year.

Despite the sharp slowdown in growth the Federal Reserve said Wednesday it would reduce its monthly bond purchases to $45 billion from $55 billion, as regardless of a sluggish first quarter, the economy has been showing signs of gaining steam in recent weeks.

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Investors were looking ahead to Friday’s April nonfarm payrolls report, which was expected to show that the recovery in the labor market was continuing.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.02% at 79.56.

On Friday, the dollar will move on the U.S. April jobs report.

Elsewhere, the U.S. is to issue a separate report on factory orders.

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