An olive branch from China to the US and a blockbuster non-farm payroll have driven trading in the Australian dollar US dollar exchange rate. The Aussie dollar US dollar pair rallied 0.2% across the European session on Friday and was trading at US$0.6840 at the time of writing. The Australian dollar was up 1.2% versus its US counterpart heading towards the end of the week.

The Australian dollar trended higher in early trade on Friday as investors reacted to trade developments in Beijing. There has been a lot talk over a phase one trade deal between the US and China but little tangible evidence of progress.  China’s finance ministry saying that China would waiver tariffs on some soybean and pork shipments from the US is the first real evidence that the two sides are closing on on a deal.  As a result, the China proxy, the Australian dollar rallied.

The latest developments come after another week of mixed signals from both sides as to whether a trade deal would be agreed sooner rather than later. Investors are now looking ahead to next week on 15th December when the White House is due to raise tariffs on Chinese imports.

266,000 Jobs Created November

The US dollar jumped following the release of the US Labour Department’s jobs data, the non-farm payroll. The non-farm payroll showed that 266,000 new jobs were created in November. This was well above the 180,000 analysts had predicted and brings the three months average up to 250,000 jobs, a level last seen in January. Even the number of jobs in manufacturing impressed.

The report also showed that the unemployment level remained steady at 3.6% and that wages climbed steadily higher at 0.2%. The data shows that the US labour market remains on solid footing. Following the report, it is safe to say that the Fed won’t be cutting interest rates for a fourth time this year when the monetary policymakers meet next week. The dollar advanced following the report.

The block buster report comes following a week of poor data. Despite today’s forecast smashing number, some dollar investors will remain cautious, some analysts even suggest that weaker payroll numbers will be back in the coming months.

 

What do these figures mean?
When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.

For example, it could be written:

1 USD = 0.6784 AUD

Here, $1 is equivalent to approximately A$0.67. This specifically measures the US dollar’s worth against the Australian dollar. If the Aussie dollar amount increases in this pairing, it’s positive for the US dollar.

Or, if you were looking at it the other way around:

1 AUD = 1.4739 USD

In this example, A$1 is equivalent to approximately $1.47. This measures the Australian dollar’s worth versus the US Dollar. If the US dollar number gets larger, it’s good news for the Aussie dollar.


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