The dollar continued to be strong versus other major currencies on the aftermath of the much stronger-than-expected US employment report for November released on Friday. Dollar / yen made a fresh 7-year high at 121.84 near the open of Asian business today, before backing down to 121.41. Strong economic data out of the United States continued to contrast with weak data in economies such as the Eurozone and Japan and this was also reflected in the rise of US Treasury yields, as more analysts are now expecting the first interest rate increase from the Fed to come around the middle of next year.
Trade data out of China was surprisingly weak, as exports grew less than expected at 4.7% (8.2% was expected) and imports actually contracted by 6.7% instead of growing by 3.9%. Cheaper oil and lower commodity prices were to blame for the lower imports. The weak Chinese data contributed to pushing the Australian dollar below the 83 cent mark against the US dollar to as low as 0.8268; the lowest since June of 2010. China is Australia’s biggest export partner.
The euro was pinned near the 2-year low of 1.2270 it registered against the dollar on Friday as it traded at 1.2281. A downgrade of Italy to triple B minus from triple B by Standard & Poor’s meant the nation’s credit was only trading one notch above junk. A public row on budget deficits between Italy and France on the one hand and Germany on the other was an indication that not all Eurozone countries were on the same page when it came to fiscal issues.
Besides the themes that are already affecting the market, the remainder of the day is unlikely to offer many fresh clues or hints due to the lack of important economic releases and events.