Talking Points:

  • AUD/USD declined despite Australia adding more employees than was estimated
  • Full time employed positions contracted, making for an overall mixed bag of data
  • The report decreased RBA rate hike bets, but a central bank reaction seems unlikely

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The Australian Dollar didn’t take January’s local employment report too kindly. But how could that be? Australia added 16.0k workers overall which was better than the 15.0k estimate. In addition, the unemployment rate fell to 5.5% as expected from 5.6% in December.

If you look into the details of the data, you will find that part time employed positions increased by 65.9k. That was the largest increase since July 2016. However, these gains were offset by full time losses amounting to -49.8k. All the while, the labor force participation rate edged down to 65.6% as expected.

Overall, you could say that the jobs report was slightly underwhelming. Australian 2-year government bond yields fell as the data crossed the wires, hinting at ebbing RBA interest rate hike expectations. Even so, the data probably has limited implications for where the central bank will take monetary policy in the near term. The Reserve Bank of Australia has hinted that they are in no rush to raise rates soon anyways.

Australian Dollar Falls Despite a Net Gain in Employment

On a daily chart, AUD/USD has put in a momentary recovery following a break below a near-term rising trend line. On the weekly chart, the pair formed a bearish engulfing candle stick pattern.

Australian Dollar Falls Despite a Net Gain in Employment