AUD Slides on Local Employment Contraction
AUD
The Australian Dollar opened this morning mixed against the majors, although mostly lower off the back of soft domestic employment data. Asian equities ended mixed, Nikkei trading +1.1%, Hang Seng -1.4% and Shenzhen -1.2%. Locally the ASX 200 fell by -0.8%. Yesterday's morning's Aussie job data saw some weakness. Australian Employment Change data was lower at -5.4k, short of forecasts as +21.2k. The Unemployment Rate remained steady at 4.2%, on expectations. A closer look at the data reveals a decline in full-time employment, with 40,900 fewer positions. This was partially offset by an increase in part-time employment, which rose by 30,500 jobs. Looking ahead, RBA Governor Bullock will be speaking on Monday. On Wednesday, we'll see CPI, the last major inflation release ahead of the RBA interest rate decision at the end of the month.
USD
AUD/USD touched yearly highs of 0.6707 yesterday morning before falling off to open today at 0.6613, as the Fed rate cut failed to meet dovish expectations. A positive session on Wall St. saw the Nasdaq (+1%), the S&P 500 (+.5%), and the Dow Jones (+.2%) all close at all-time highs. The US Dollar gained strength yesterday as the US Federal Reserve delivered the expected 25bps rate cut but signaled little urgency to decrease borrowing costs quickly in the coming months. Fed Chair Powell reasoned the day's policy action as a risk-management cut in response to a weakening labour market. US jobless claims data printed better than forecasted as claims were 231k, beating forecasts of a 240k. No major US data tonight.
EUR
AUD/EUR opened lower at 0.5611 against yesterday's 0.5624. Downwards pressure continues on the Aussie as we move further away from last week's 3-month highs. The DAX gained +1.4% and the CAC rose +0.9%. Some AUD/EUR strength lost off the back of weaker Australian employment data as lower Australian jobs change which signal’s a possibility for an earlier Australian interest rate cut while Europe's ECB sits steady at 2.0%. No major Eurozone data ahead of Flash PMIs on Tuesday afternoon.
GBP
AUD/GBP opens flat at 0.4880. the FTSE +0.3%. The Bank of England held rates at 4% as widely expected despite perceptions of a cooling labour market in recent months. BOE's rate decision saw 2 of 9 Members voting to cut rates by 25bp, showing strong unanimity to keep its monetary policy steady against inflationary pressures. Today will see UK Retail Sales m/m and Public Sector Net Borrowing. England's next headline news expected to be Tuesday with BOE Gov Bailey speaking. Attention will be focused to uncover any insights for future Monetary Policy decision.
NZD
AUD/NZD gains strength opening higher at 1.1240, up from yesterday's 1.1210, with the NZD weakening off the back of a GDP slump which saw the currency pair hit 3-year highs of 1.1279. GDP q/q printed -0.9% against forecasts of -0.3%. This is showing New Zealand economy to be contracting much greater than expected for the quarter. Overall, the annual GDP decreased 0.6% and New Zealand's economy contracted three out of the last five quarters. Concerns grow over a cooling NZ economy with the market pricing in further cuts to the OCR (Official Cash Rate) from the RBNZ. The market has priced a 20% chance that the central bank will cut 50 basis points by October. There's no economic data from NZ until ANZ Business Confidence on Tuesday September 30.