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Sean Callow, analyst at Westpac, suggests that the dip in Australia’s unemployment rate in Sep certainly doesn’t look significant but it caused markets to trim pricing for a Nov RBA rate cut to a modest 25% and added confidence to Westpac’s existing call for a period of assessment for the RBA.

Key Quotes

“AUD/USD of course popped higher on the data but its price action has been underwhelming. Despite A$ often seeming to be the preferred proxy for the US-China trade war, it sits at #6 within the G10 over the week, up just 0.4%.”

“Particularly given near-record net shorts for real money accounts on the CME, this is a poor performance. But the thin local calendar, likely further positive noises on trade talks to support equity markets and perhaps a little further trimming of RBA easing risks suggest a modest upside bias for AUD/USD over the week.”

“Our modestly bearish DXY view short term should help, with scope for 0.6825/50. But any probes in the 0.6850/0.6900 area would be tempting for structural short positions.”