AUD Gains Despite Headline Jobs Miss, Full-Time Employment Up Sharply
Australian Dollar, Unemployment Data Talking Points:
- Overall employment rose by just 500 jobs in June
- This was hugely below expectations, and they were modest enough at a rise 9,000
- However full-time jobs grew impressively
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The Australian Dollar Gained Thursday despite a big miss for June’s official headline job creation, as full-time roles gained strongly and overall participation held up.
Just 500 new jobs were created overall, well below even the modest 9,000 gain expected. However full-time roles grew by 21,100 while part time jobs fell by 21,600. Rightly or wrongly the market is always cheered by full-time rises. Moreover, that participation rate was steady at 66%, while the overall unemployment rate stayed at 5.2%.
The Reserve Bank of Australia is known to be watching the domestic labor market especially closely in its monetary policy deliberations. Australia has seen years of strong job creation, but, judging by recent statements, the RBA thinks that there is more to come. This report, while patchy, probably won’t dissuade it from that view.
AUDUSD duly rose once investors digested the details of the release.
On its daily chart, the pair continues to bounce from its 2019 low. Immediate interest rate differentials continue to drive as investors price in lower US rates but doubt that Australian borrowing costs will fall again anytime soon after back-to-back monthly cuts.
The key Official Cash Rate remains well below its US equivalent, however, at a record low of 1%. It remains to be seen whether this will have much effect on stubbornly low Australian inflation. More cuts must be probable if it does not, in accordance with the RBA’s mandate, but for the moment AUDUSD seems supported by the perception that still-lower rates from here are a big ask.
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--- Written by David Cottle, DailyFX Research
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.