The Australian and New Zealand dollars drifted weaker against their major counterparts on Friday morning in Asia as cautious traders trimmed positions in high-risk currencies ahead of today's U.S. non-farm payrolls report and Sunday's China industrial production and retail sales data.
The U.S. non-farm payrolls are expected to remain unchanged 165,000 in May and the jobless rate is expected to stay put previous month's 7.5 percent. Investors are seeking cues from the data in order to shape expectations for the timing tapering Federal Reserve stimulus program.
Data ahead of the all-important payroll report was not quite impressive, with first-time claims for U.S. unemployment benefits showing only a modest decrease in the week ended June 01 and the private sector adding fewer jobs than expected.
A report released by the Labor Department on Thursday said initial jobless claims dropped to 346,000, a decrease of 11,000 from the previous week's revised figure of 357,000. Economists had been expecting jobless claims to dip to 345,000 from the 354,000 originally reported for the previous week.
Meanwhile, Wednesday's report on the U.S. private sector job growth was weaker than expected in May. ADP said private sector employment increased by 135,000 jobs in May, compared to forecasts for addition of 171,000 jobs.
Commodity linked Australian and New Zealand dollars are particularly vulnerable ahead of the industrial production and retail sales data from China, which are due to be released in the weekend. Slowdown in Chinese economy upset Australia as the red dragon is Australia's biggest trading partner and key export source for its mining rich industry.
In Europe, the CB chief Mario Draghi ruled out applying negative rates in the near-term and said the central bank will keep the policy accommadative as long as needed. Draghi also sees gradual recovery over the rest of 2013 for Euro-zone.
ECB also slashed the 2013 growth forecast but raised 2014 growth forecast to 1.1 percent from prior projection of 1.0 percent. The central bank expects 2013 inflation to be 1.4 percent and 2014 inflation to be 1.3 percent.
The European Central Bank on Thursday retained its benchmark interest rate at a record low 0.50 percent in June, as widely expected.
The Australian dollar approached the key 1.40 level against the euro, falling as low as 1.3994, its weakest level since October 2011. Further bearish extension could lead the aussie re-testing the 1.4080 support in the near-term.
The aussie slipped to 0.9465 against the US dollar, staying a 0.3 percent short of yesterday's 20-month low of 0.9434. If the aussie penetrates yesterday's lows, 0.94 is then seen as the next major support level.
The Australian dollar dropped to 91.22 against the yen, its lowest level since January 09. The next downside support for the aussie-yen pair is seen around the 90.0 level.
The aussie reached 0.9737 against the Canadian dollar, its weakest level since March 2011. If the aussie-loonie pair continues to move in its bearish track, 0.96 is seen as the next major support level.
The Australian dollar fell to near the key 1.19 level against the New Zealand dollar, falling as much as 1.1904 to set the pair its lowest level in a week. If the aussie-kiwi pair extends downtrend beyond 1.19, its next likely support level is visible at 1.1850.
The New Zealand dollar dropped to 76.48 against the yen, its weakest level since March 04. Next likely support for the kiwi-yen pair is seen around the 76.0 area.
The kiwi fell to a fresh 1-year low of 1.6664 against the euro and a session's low of 0.7947 against the US dollar on Friday morning in Asia. If the NZ dollar extends downtrend, likely support levels are seen at 0.79 against the greenback and 1.70 against the euro.
Looking ahead, Japan's preliminary reading of leading and coincident indexes for April are due out at 1:00 am ET.
German trade data, current account, industrial production-all for April and German labor costs for the first quarter are due out in the European session.
Besides the U.S. non-farm payrolls data, traders will also focus on Canada's employment report for May and the U.S. consumer credit for April in the North American session.
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