The United States national unemployment rate showed little change at 5.0% during March, with approximately 215,000 new jobs added to the economy during the month.

The solid jobs figures add to the picture of a resilient economy and there are expectations of more US interest rate hikes later this year. Yet top central banks are sounding ever more cautious, continuing on with ‘dovish’ mantra despite having a tightening interest rate bias.  They are still waiting to see some ‘inflationary’ signs that may be in the economy, so we have an interesting equation and one which is ultimately causing some confusion.

I’d suggest that an interest rate tightening move by the Federal Reserve will continue to be pushed back to later in 2016, and that leaves currencies like the AUD free to pursue a grinding momentum to the upside.

The AUD paused its upwards move near .7800, and since then we have seen it correct a little. If the currency can’t break or move below .7400 soon, the answer is up and away we go…

Oil has rebounded off its low along with most of the commodity sectors, which continue to leave Australia in a good place as the AUD is very much aligned to commodity prices. The AUD/SGD has encountered resistance at 1.04, whilst USD/SGD remains in its downward trend.

The US Economic /Political Picture is proving rather interesting, an uncertain political future and an economy where no-one is spending cash, means Australia is not such bad place to invest!

Brandon Reid
The Currency Guru

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