With respect to the Aussie jobs report today, analysts at TD Securities argued that September could be the correction they were looking for last month.
Key Quotes:
“We look for employment to lift by +25k in September (median +15k but 6/25 look for +20k, range -6k to +30k) consistent with job ads and business surveys pointing to 2 ½%/y employment growth. When +25k/m is combined with our expected dip in the participation rate to 65.6% (mkt unch at 65.7%) the unemployment rate drops to 5.1%, barely a hair above the RBA’s soft target of 5%, and would be the lowest rate in six years (mkt unconvinced, looking for unch at 5.3%).”
What to do in FX?
“AUD to jump if employment is stronger and the unemployment rate slides to 5.1% as we expect, but fade the rally if full-time employment falls substantially.”
“IF we are wrong: If employment falls by 20k – led by full-time – and the participation rate remains unchanged at 65.7%, the unemployment rate jumps to 5.6%, back to April levels after months of hard-won gains into eroding spare capacity and lowering underutilisation ratios – We recommend fading any bearish market reaction to this scenario (rates and FX) as conditions for an ongoing strong labour market implies even firmer wages growth in due course.”
“The next Q3 WPI report is published on 14 November, where the 3.5% boost to minimum wages will be incorporated into this report.”
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