AUD Sinks on Soft Jobs Data
AUD
The AUD opens lower across the board after revealing a surprising jump in Australia's unemployment rate to 4.3%, sending ripples through financial markets, causing the Australian Dollar to slump and making an August RBA rate cut almost certain. Despite a marginal increase in total employment, a significant rise of 33,600 unemployed individuals in June contradicted expectations of job creation. Given the rising unemployment rate, sluggish economic growth, and inflation now within the RBA's target, it's highly likely the Reserve Bank of Australia will address these issues at its August meeting. The ASX saw gains of +0.9%, whilst Asian equities finished the day mixed, with the Shenzhen up +0.7%, the Nikkei +0.6% and the Hang Seng -0.1%. Commodifies were fairly mixed with Oil +1.9% Silver +0.3% and Gold was flat. Looking forward we have the China's rate decisions on Monday as we all RBA Governor Bullock speaking later through next week.
USD
The AUDUSD dipped by about 1% following the Australian unemployment data being released yesterday, although it has made a partial reversal and opens at 0.6498. The latest US economic figures delivered several positive surprises. Retail sales in June rose by a robust 0.6%, defying expectations for a minimal 0.1% gain and rebounding sharply from the previous month's decline. Core retail measures also outperformed forecasts. Further indicating economic strength, the Philly Fed Business Outlook Survey for July soared to 15.9, far exceeding the anticipated negative reading. To top it off, weekly jobless claims came in lower than expected, with both initial and continuing claims showing improvement. This all aligned with the Federal Reserve's view of not needing to rush into an imminent rate cut. The strong data from the U.S. spurred Wall St. overnight and saw the Nasdaq close +0.8%, the S&P 500 +0.6%, and the Dow Jones +0.5%. The next key event would be Fed Chair Jerome Powell speaking at early next week at a conference.
EUR
The AUDEUR opens lower from yesterday opening down by about 0.4% at 0.5593. In terms of data, we had the Final Core CPI y/y come out at 2.3% as well as Final CPI y/y at 2%. Both figures come out as expected and hence had little effect on the rate. European equities opened strongly, the Stoxx, DAX and CAC all up over +1.1%. The DAX and CAC closed +1.5% and +1.3% respectively. Although next week we are due for some volatility with both German and French Manufacturing and Services PMIs as well as the ECB’s interest rate decision. The ECB’s Main Refinancing Rate is currently at 2.15%.
GBP
The AUDGBP opens lower at 0.4836 off of local news. The FTSE was up 0.5%. We had their Unemployment Rate which printed at 4.7% compared to forecasts of 4.6%, as well as an increase in the number of unemployed claims, where 25K claimed unemployment. Looking forward we have their flash Manufacturing and Services PMI set to release towards the back end of the week. Retail sales previously came out at -2.7%, making this an interesting release for those watching currency markets as they try to gauge the Bank of England’s next moves.
NZD
The AUDNZD opens lower at 1.0937 although still sitting roughly at its highest level since early April. Today they have their Credit Card spending which previously came out at 2.2%. Looking ahead we have their quarterly CPI out on Monday expected at 0.6% which is down by 0.3% from last reading (0.9%).