Australian Dollar Soars on Upbeat Jobs Report
- Australian Dollar soars as May jobs report outperforms forecasts
- Unemployment rate drops to four-year low as participation rises
- Front-end bond yields rise, pointing to hawkish RBA outlook shift
The Australian Dollar soared against its major currency counterparts after May’s labor market data vastly outperformed economists’ expectations. The numbers showed the economy added a net 42k jobs last month. Consensus forecasts envisioned a paltry 10k gain ahead of the announcement.
The internals of the report seemed no less impressive than the headline figure. Most gains (52.1k) came from full-time employment, while part-time positions edged lower (-10.1k). The jobless rate unexpectedly fell to 5.5 percent, the lowest since February 2013. More impressively still, the participation rate ticked up.
The currency rose alongside local front-end bond yields, hinting that the positive results inspired a shift in the hawkish direction along the expected RBA policy spectrum. Still, markets are not pricing the possibility of a rate hike at least until the second half of 2018.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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