Aussie Dollar Brushes Off Jobs Report, Follows Risk Trends Lower
- Australian Dollar little changed as May’s jobs report crossed the wires
- Australia added 17,900 positions versus 15,000 estimated by economists
- AUD/USD follows ASX 200 futures lower in the aftermath of the data
The Aussie Dollar initially saw a small reaction against its major counterparts after Australia’s employment report crossed the wires. The data showed that 17,900 jobs were created in May, which was better than the 15,000 gain expected.
All of the positions added came from the part-time sector. There were no gains or losses from the full-time portion. The unemployment rate held steady at 5.7 percent as expected. While an increase in the participation rate to 64.9 percent was forecasted, it remained unchanged at 64.8 percent as it was in April.
Australian front-end government bond yields saw a limited reaction as well. This could have been a result of the markets interpreting the data to have a minor impact to the Reserve Bank of Australia’s outlook on monetary policy. Indeed, the RBA went into a wait-and-see approach in its most recent policy announcement. The central bank believes rates are where they should be in order for CPI and sustainable growth to return to its longer-term target.
The Aussie’s decline in the aftermath of the jobs report can likely be traced to it following shares lower. Being a sentiment-linked currency, the AUD/USD declined alongside ASX 200 futures, as can be seen in the chart below. Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing a narrowly positive reading. The SSI is a contrarian indicator, implying further AUD/USD weakness ahead.
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