According to Robert Rennie, head of FM strategy at Westpac, while today’s 21.1k rise in Australia’s full time employment (2.9%yy) was better than expected, the 20.6k drop in part time and 5.24% unemployment rate suggested a softer underlying tone in line with partial data suggesting that jobs momentum has slowed.
Key Quotes
“It reinforces Westpac’s view that the RBA has further to go in terms of rate cuts if it has any chance of hitting the 4.5% NAIRU target any time soon.”
“However, with a third cut fully factored by Feb next year and 35% of a fourth cut to 0.50% after that, its hard to see too much downside risk to the A$ from interest rate differentials alone. And with iron ore holding above $120 helping drive record trade surplus, the A$ should remain well supported for now.”
“Thus we again hold a neutral bias for the week ahead, though we still expect to see the A$ lower on a 1 and 3 month basis and see near term price action as capped by 0.7050.”
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