Market News & Analysis
Stronger jobs data boosts AUDUSD
January 23, 2020 2:20 PM
Earlier this week we spoke about the scrutiny that today’s Australian labour force data for December would receive as well as its importance to the future direction of the AUDUSD and RBA cash rate. We also highlighted the misgivings of respected economic journalist Ross Gittins, shared by many others who believe additional RBA rate cuts will do more harm than good.
Today’s labour market data has temporarily put that debate on hold with the headline employment figures much better than consensus expectation. 28.9k new jobs were created in December vs expectations of 15k. The unemployment rate, the measure of labour market health I most closely follow, fell to 5.1% vs expectations of 5.2%.
Notably, the unemployment rate finished 2019 below the RBA’s own forecast of 5.2% and below its assessment from the December board meeting “The unemployment rate has been steady at around 5¼ percent over recent months. It is expected to remain around this level for some time….”
However, the details within the report were less impressive. A 29.2k increase in part-time jobs masked a small fall (300) in full-time jobs. A trend has been in place for some months now and has resulted in 51.k rise in part-time jobs since September while in the same period time full-time jobs have fallen by 8.0k.
Nonetheless, the resilience of the labour market has already seen a number of banks and the market unwind expectations for a February RBA cut. After being almost 60% priced earlier this week, the strong jobs report, the rise in housing sentiment in yesterday's consumer confidence index combined with the AUDUSD sitting contently below .70c has left just 25% of a rate cut priced for the February RBA meeting. A full rate cut is not priced until August 2020.
Pre the number, the AUDUSD was holding just above key support .6830 and has since recovered to be trading back near .6875. Because news on the Coronavirus is likely to get worse before it gets better, the AUDUSD is likely to be capped in the short term by the band of resistance .6880/00 that includes the 200 day ma (.6882) and the September high at .6895.
Source Tradingview. The figures stated areas of the 23rd of January 2020. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.