Local Employment Data Due at 11.30am Today

AUD

The AUD was generally held recent gains across most major currency pairs ahead of today's employment report. Asian Equities were relatively subdued yesterday with the Shanghai Comp gaining 0.4% while the Nikkei was down a modest -0.3%. The ASX dipped 0.1% to 7272.5 points on Wednesday as losses posted by financial stocks and resources weighed on the benchmark index. Commodities were down with Iron Ore underperforming -4.7%. In what is the headline piece of data for this week, at 11.30am today the Australian Labour force report for September will be released. Investors' focus will remain on the employment and hours worked (as supposed to the headline unemployment rate itself), while the markets may be more focused on positive signs such as hiring indicators, as firms prepare for the lockdowns to end in NSW, with a risk of a large fall in measured employment in September. This is due to the way stood-down workers received government support during the current lockdowns. While many workers last year continued to be paid by their employers, the government's JobKeeper wage subsidy was paid through firms, stood-down workers this time are being paid through income support directly from the government (not through their employer). For this reason, a large portion of workers in NSW who were stood down in August and September should be captured as not employed.

USD

The AUDUSD pair is trading higher this morning, currently trading at a rate of 0.7380 at the time of writing. US Equities posted minor gains with the Nasdaq up 0.5%, while the S&P 500 was up 0.3%. US 10-year yields retreated to 1.54% while Oil was flat and held above $80 a barrel. Data overnight in the US showed the CPI for September rose 0.4% MoM and 5.4% YoY, both beating expectations by 0.1% with core measures matching expectations at 0.2% MoM and 4.0% YoY. Overnight the FOMC Minutes were largely as expected and indicated that the conditions to begin tapering had largely been met with the process likely to begin following the next meeting and conclude by mid-2022. Inflation forecasts were raised though were still seen as transitory and the Fed stressed that more stringent conditions would need to be met before rates were raised and this was unlikely over the next few years. There’s a flurry of US data on the docket this evening with US PPI and Unemployment Claims being of note.

EUR

The AUDEUR pair is trading at similar levels seen to yesterday, trading at a rate of 0.6361 this morning. European Equities rose on Wednesday with the pan-Euro STOXX 600 index hit two-week highs and closed up 0.7%, as did the German DAX while the CAC gained 0.8%. In early data, the Eurozone Industrial Production for August was -1.6% slightly better than expectations of -1.7%, with YoY at 5.1% also beating expectations of 4.7%. There is no macroeconomic data for the EU on the docket this evening, with investors awaiting the release of the Australian Labour data this morning and tonight’s US Unemployment Claims.

GBP

The AUDGBP pair is trading at a slight gain this morning, sitting at a rate of 0.5400 at the time of writing. The London FTSE 100 inched 0.2% higher, lifted by gains in strong earnings but worries about a possible early interest rate hike by the BoE kept the sentiment in check. In early data, Britain’s economy returned to growth in August after contracting for the first time in six months in July, keeping intact financial markets bets that the BoE will begin raising interest rate before year end, UK Monthly GDP grew by 0.4%, missing expectations of 0.5% and below its pre-pandemic coronavirus peak in February 2020. UK Industrial Production for August MoM was 0.8% (0.2% expected) and YoY came in at 3.7% (3.3% expected). UK Manufacturing Production for August MoM was 0.5% (0.0% expected) and YoY meet expectations of 4.1%. Little in the way of data this evening with BoE MPC Member Tenreyro speak being the only mention.

NZD

The AUDNZD followed suit to make a gain overnight with the pair trading at a rate of 1.0591 this morning. In early data yesterday, the ANZ bank's early review of business sentiment showed firms are more optimistic about their own outlook at a net 26 percent from 18 percent in September. The headline view of the broader economic outlook was only slightly more pessimistic at a net 8.6 percent. A lack of local macroeconomic data will have investors focusing on the Australian Labour force data today at 11:30am.