The Aussie and Kiwi continued falling today as the bloodbath in Apple's stock continued and the S&P briefly broke a couple points above the psychologically important 1500 figure and then got hammered back down and closed unch.
AUD/USD
There appeared to be two main drivers to the Aussie weakness today. First, there was strength in the Euro across the board. The EUR/AUD cross was up approximately 185 pips on the day, putting downward pressure on AUD/USD (closed 105 pips down on the day.) Second, the weekly U.S. unemployment number beat the consensus estimate by a wide margin - for the 2nd print in a row. Actual: 330K, Est: 359, Previous: 335. This has caused some market participants to adjust the predictions for the next NFP report and unemployment rate print on Friday, February 1st. This in turn affects speculation about when QE might end. Remember, a lower then expected unemployment print means that our stimulus addicted market will get its last fix sooner then expected. To understand what that means for the currency markets think about the effects that QE has previously had and simply reverse them: a weaker USD and higher commodity prices (stronger AUD, NZD, CAD.)
Additional factors from Monday included the lower than expected CPI reading and the RBA's Treasurer saying that another rate cut was possible. China's HSBC manufacturing PMI came in better than previous on Wednesday (actual 51.9, previous 51.5) but market participants were expecting it to come in better, so it didn't have much of an impact.
EUR/USD
Remains locked in its trading range of 1.3400 - 1.3250, and seems to have been driven up today more from the arbitrage affect of strong demand for EUR/JPY than from fundamental demand for EUR/USD. The SNB seems to have temporarily stopped selling Francs to buy Euros, but the franc pairs deserved to be watched closely in case SNB's Jordan gives his traders the green light again.
USD/CAD
Appears poised for a continued move to the upside if the Canadian CPI number tomorrow comes in lower then expected. The US New Home Sales number is also coming out at 10:00 AM EST and usually has a decent impact on the CAD as well. (Canada exports a lot of the raw materials used in construction and manufacturing). The CAD is already significantly weak after a surprise dovish stance from the BOC on Wednesday, and took a slight breather today as the Aussie ripped down today so it has decent potential to the upside on Friday.
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