- Aussie labour report opened the doors for a rate cut in October:
- AUD/USD down over 0.45% on the day, so far, August and current September lows at 0.6691/78.in spotlight.
AUD/USD has continued to correct to the downside and is trading lower by -0.46% at the time of writing following last night’s Unemployment uptick of 0.1% which opens prospects for a rate cut from the Reserve Bank of Australia as soon as next month. Currently, AUD/USD is trading at 0.6796 having travelled down from a high of 0.6831 to a low of 0.6780.
The laour market report was somewhat mixed, with the Employment Change beating expectations but falling in below the prior month’s solid number. However, it was the gradual rise in the unemployment rate that will likely be of concern to the RBA which edged higher to 5.3%. “We expect this will be enough to prompt it to cut rates again at the October meeting,” analysts at ANZ Bank argued.
Aussie jobs data points
Analysts at ANZ Bank browk down the key factors in the report which have opened the doors for a rate cut in October:
- Employment growing by a solid 35k.
- Part-time employment (+50k) was the main contributor to the headline result; full-time employment fell 15k.
- The participation rate rose to a fresh record high of 66.2%, with increases seen in both male and female participation.
- The underemployment rate rose 0.2ppt to 8.6%. Underemployment is now up 0.5ppts from the 8.1% low in February, while unemployment is up 0.4ppt over the same period. This lift in labour market spare capacity suggests what little pressure there was on wages is likely to ease, making the RBA’s task of lifting inflation into the 2-3% target band more difficult.
- Leading indicators point to a further deterioration in the labour market over coming months. Employment growth looks set to slow and we expect that the unemployment rate will rise to a peak of 5.4% in Q4 of this year. This will keep the RBA is easing mode, and we continue to expect the next rate cut at the October meeting.
AUD/USD levels
AUD/USD slipping towards the 0.6736 August 14 low which is to offer support. Major support comes in between the August and current September lows at 0.6691/78. “Unexpected failure at 0.6678 on a daily chart closing basis would suggest the resumption of a downtrend with the 0.6548 February 1999 high being in focus,” analysts at Commerzbank argued.
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