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According to Sean Callow, analyst at Westpac, AUD is clearly weakest in the G10 over the week after today’s employment data and has raised caution over the fall, with pricing for the RBA to cut rates in Feb 2020 jumping from about 50% to 70%.

Key Quotes

“Given that the RBA last week forecast the unemployment rate to sit around 5.2% through end2020, the recent gyrations in the official data from 5.2% to 5.3% are unlikely to change the dial greatly.”

“However, Westpac was already predicting a Feb rate cut so we can’t complain about market pricing moving closer to our view. The -19k reading on total employment followed another soft wages number for Q3.”

“China’s economy for Q4 showed further weakness in industrial production, just 4.7%yr. Before this year, IP growth hadn’t been below 5% since a seasonal distortion in 2002.”

“This should see A$ remain an underperformer near term, including against this week’s star, the kiwi.”