Aussie and Kiwi Rebound as US Jobs Data Underwhelms

The Australian and New Zealand dollars rebounded after a weaker-than-expected US jobs report raised concerns about the strength of the US labor market. US payrolls increased by just 26,000 in September, significantly below expectations of 59,000. August's payrolls were also revised down to 133,000 from 162,000, while the unemployment rate edged up to 4.2% from 4.1%. The softer jobs data weakened the US dollar, providing support for risk-sensitive currencies like the Aussie and kiwi.

Despite the weak employment figures, US shares remained resilient, with the S&P 500 and Nasdaq holding near recent highs. The AUD/USD pair saw a short-term rebound, with initial resistance at 0.6985 and 0.7020, while support is seen at 0.6920. The NZD/USD also recovered, though a clear reversal signal has yet to emerge, with key support at 0.5600 and resistance at 0.5640 and 0.5685.

In Japan, Tokyo inflation accelerated sharply in September, strengthening the case for further Bank of Japan (BoJ) rate hikes. Core CPI rose to 2.7% from 1.8%, exceeding expectations of 2.4%. Excluding fresh food and energy, inflation increased to 3.0% from 2.0%, while services inflation accelerated to 2.3% from 1.4%. Markets have almost fully priced in a BoJ rate hike by December, with USD/JPY trading near 157.82.

Looking ahead, Australia will release the Melbourne Institute inflation gauge and New Zealand ANZ commodity prices on Monday. The Westpac consumer confidence survey is due on Tuesday, which could add pressure to the Australian dollar if it deteriorates further. In the US, the Federal Reserve meeting minutes on Thursday are the key event of the week and could provide important clues on the outlook for US interest rates.