Fundamental Australian Dollar Forecast: Bullish

The Australian Dollar moved modestly higher last week, in the process extending the eye-catching bull run against its US rival which began back in early December. That run has now taken it to highs not seen since last October.

The Aussie's support has been quite broad-based too. General US Dollar weakness has certainly helped. Global investors increasingly suspect that the US won't be alone in tightening monetary policy this year and this suspicion has seen many currencies rise against the greenback. The Euro is notable in this regard, but the Australian Dollar has at least caught a tailwind. It has had some domestic help, too. News of blockbuster Australian retail sales raised hopes that the Australian consumer –often absent from the economic party- might be about to step up.

And the domestic front may continue to dominate Australian Dollar trade as we go through the coming week. There are two especially notable pieces of economic data due from Australia as it proceeds. The most important will probably be Thursday's official employment figures for December. The previous month's data saw a rise of more than 61,000 jobs. This not only crushed expectations –which had centered on a rise of just 19,000- it also formed the biggest monthly gain for more than two years.

Now this is a quite volatile series, especially in terms of the split between full- and part-time work, and it may be asking far too much to expect another storming month. However, Australia's unemployment rate crept lower quite reliably thorough 2017. It started close to 6% and has nor retreated to 5.4%. Ongoing incremental improvement here will probably support the Aussie, even if headline job creation is likely to have a more immediate market impact.