THE TAKEAWAY: Australian labor market posts better than expected job gains > The heavily sold currency may find short lived relief as markets price in additional rate cuts > AUDCAD trades higher
The Australian Dollar traded higher versus its major counterparts as the Aussie economy added 14,500 new jobs in September, beating expectations set at 5,000. The unemployment rate notched slightly higher to 5.4 percent from 5.3 percent likely due to an uptick in the participation rate despite the solid job gains. The full time work force increased by 32,000 positions while part time staffers lost 17,700 jobs.
Traders likely interpret today’s data as reason to unwind short interest as the Aussie currency has been under pressure against the Canadian Dollar since August 8 on the backdrop of a weakened fundamental outlook in Chinese industrial activity which may exert unwelcomed pressure on Australian exports.
The rally may be short lived as traders appear to have priced in a 70 percent probability of another 25 basis point reduction in rates by the Reserve Bank of Australia on November 6.
AUD/CAD, 1 Minute Chart