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AUD/USD Shows Mixed Response to a Mixed Employment Report

AUD/USD Shows Mixed Response to a Mixed Employment Report

Daniel Dubrovsky, Contributing Senior Strategist

Talking Points:

  • AUD/USD volatility after the jobs data would eventually find a bullish resolution
  • The country added a net 300 jobs in February versus 13.5k anticipated
  • Australian unemployment unexpectedly drops to 5.8%, and the labor force declined as well

Find key turning points for the Australian Dollar with DailyFX SSI.

The Australian Dollar swung against its US counterpart after the Aussie jobs report for February offered a mixed view of labor conditions. The country added 300 jobs versus 13,500 expected and compared to a 7,400 loss in January. Most of the jobs gained came from the full time positions which showed a 15,900 gain compared to a 40,300 loss in January. The part time sector lost 15,600 jobs in February versus gaining 32,900 in January.

The unemployment rate dropped to 5.8 percent compared to the 6.0 percent economists’ estimates. The prior figure was 6.0 percent. Meanwhile, the labor force participation rate declined to 64.9 percent from 65.1 in the last month, lower than the 65.2 percent expectations. This marks the lowest participation level since September 2015.

Australian front-end government bond yields were also volatile with the data release: rallying, declining, and leveling off in the aftermath. Overnight index swaps are pricing in at least one Reserve Bank of Australia rate cut over the next year.

The central bank’s outlook for employment has increased according to March’s meeting minutes. Members noted that there is uncertainty about the trajectory of the labor force participation rate. While the RBA continues to monitor labor market conditions; the ‘neutral, data-dependent’ central bank said that continued low inflation would provide the scope for easier policy.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.