Emu Dollar Falls on Poor Job Creation Data

It's been a tough week for the emu dollar as disappointing job creation figures fail to impress the markets.

Peter Lavelle with specialist foreign exchange broker Pure FX - 13.05.2011.

AUD/USD - 1.0676

The emu dollar has had a tough time next to last week, when an increase in growth forecasts from the Australian government moved the emu to almost 3-decade highs against the US dollar.

This relative decline owes to two main factors:

the prospect of Greece defaulting, which has prompted the markets to flee riskier currencies such as the emu in favour of the US dollar,
and disappointing job creation figures inside Australia.

The prospect that Greece could default has prompted investors to seek US dollars as the planet's premier economy, therefore relatively protected from economic troubles elsewhere on the globe. This both brought the emu down as a risk-based currency, while lifting the US dollar higher against main rivals.

Looking ahead this situation looks set to remain until IMF officials announce a second bailout for Greece, at which point appetite for riskier currencies like the emu should increase.

Turning to job creation figures meanwhile, the emu dollar tumbled following the announcement from the Bureau of Statistics that new jobs declined -22k in April, compared to a +43.3k rise the month before. This hurt the emu given that the markets had forecast an increase in job creation figures, therefore causing a shock on release of the official data.

Reports meanwhile that unemployment in Australia remained steady at 4.9% did little to ease this pain, since the markets had forecast a decline in unemployment.

It means in short that the emu dollar has fallen quite considerably against the US dollar in the last week.