Warm reception for US Payrolls result across Asian markets

Warm reception for US Payrolls result across Asian markets

By Tim Waterer (Senior Trader, CMC Markets)

Friday’s positive US Non-farm Payrolls result was given a warm reception by Asian stock markets today with investors in ‘buying mode’ to start the week. A solid US payrolls result as well as upward revisions to previous months was enough to allay growth fears about the US economy. With traders content that the US recovery effort is still taking shape, the major indices marched higher today with the US jobs market looking more robust than previously forecast.

With the US jobs data giving the global growth landscape a more convincing appearance, commodities received renewed buying interest and this is reflected in the performance of resource stocks. On the Australian market, Materials and Energy stocks were the standout performers with base metal and oil prices responding favourably to the upbeat US employment data.

The Australian Dollar stumbled today upon the release of the soft retail sales number, particularly with the RBA interest rate decision due on Tuesday. Despite a push higher on Friday night after the US jobs number, the AUD gave back ground today with a potential interest rate cut on the cards over the coming month or two. The disappointing retails sales data today had traders exercising caution with the AUD ahead of what shapes as a potentially close call on interest rates tomorrow.

While I think the RBA will likely defer a rate cut this time around, the AUD could remain under short term pressure while ever there is the presence of an easing bias from the central bank. Today the AUDUSD rate spent much of its time below the 1.03 level even though risk sentiment was high, with traders seemingly deterred from taking long AUD positions ahead of the Tuesday RBA decision which poses some event risk.

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