Australian Dollar Advances on Strong Employment Data

Australian Employment increased 30.9K in August, notably above the 25K that was expected, as well as the 25K in July. Importantly, all of the increase in employment came from full time jobs— those increased 53.1K, while part time employment actually decreased by 22.1K. These figures are in contrast to July when full time employment decreased, while part time employment increased. The unemployment rate ticked lower to 5.1% from the 5.3% in July, and below the 5.2% that was expected.

The Australian Dollar is currently getting a boost from the better-than-expected employment data, as a stronger economy is seen as positive for interest rate expectations. That being said, markets are maintaining a fairly conservative view with regard to interest rate hikes out of the Reserve Bank of Australia. Overnight index swaps suggest that the central bank will raise rates by 25 basis points over the next twelve months, up from 10 basis points before the employment data. Taking a look at trading action, the Aussie-Dollar broke above the 0.92 area, which was posing near-term resistance, but the break is not decisive at the moment. We will see if Thursday’s broader risk trends reinforce the bullish move in the Aussie, or serve to bring the commodity currency back down.