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THE TAKEAWAY: The Australian Dollar rallied on news that the economy added 50,100 jobs in April which surprised economists who were expecting a figure closer to 11,000.
Tuesday saw the Reserve Bank of Australia cut the overnight cash rate to an all time low of 2.75 per cent from 3.00 per cent. This caused the so called ‘Aussie’ to slump to mid 1.01, a level not seen since early March this year. The Aussie has been trending lower in the recent weeks due to a combination of factors including soft domestic data, as well as weak Chinese data with rate cut bets also taking effect.
Ahead of the employment data release, economists were expecting 11,000 jobs to be added to the economy in April, with the unemployment rate to remain unchanged at 5.6 per cent. These estimates proved too conservative as it was reported that the Australian economy added 50,100 jobs in April, with the unemployment rate falling to 5.5 per cent. The last print of the participation rate came in at 65.1 per cent with analysts expecting this not to change in April. Participation also increased to 65.3 per cent which signaled that perhaps things were picking up.
The Australian Dollar which is one of the highest yielding currencies presently, rallied from 1.018 to above the 1.023 mark after the announcement.