Annette Beacher, chief Asia-Pacific macro strategist at TD Securities, suggests that today’s Australian March employment report did not feed the doves as the unemployment rate popped back up to 5% as widely anticipated (the 6m average is also 5%, not trending anywhere but sideways).
“February’s +5k was upgraded to +11k; and employment jumped by +26k (mkt +15k, TD +17k) where full-time surged by +48k. The RBA expects the unemployment rate to be 5% this year, so today’s report is consistent with that view.”
“The RBA also focuses on underemployment, although in March these measures edged higher. However underemployment and underutilisation rates/ratios have been edging lower (not in a straight line) for the last two years. The underutilisation rate hints at wages growth closer to 2¾% by year end.”
“Despite bearing the weight of rate cuts both offshore and domestically, the AUD cannot sustainably trade through $US0.70, while sellers tend to emerge when trading past $US0.72. This tight range is likely to continue until we have clarity on the outcome of the 18 May election (turning out to be more of a close call than thought a few months ago) and what kind of fiscal stimulus we can expect over the coming year or so (tax cuts vs minimum wage hikes).”