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Chidu Narayanan, economist at Standard Chartered, suggests that after the recent release of Reserve Bank of Australia’s meeting minutes, this week’s Australia’s job-market data will be watched closely, after the comment in its meeting minutes that “developments in the labour market were particularly important”.

Key Quotes

“We maintain that job-market deterioration will be a key driver of the RBA’s next move, which we believe will be a cut; this has been our view since July 2018. However, we expect the central bank to remain on hold despite increasing market pressure, until it sees significant and consistent deterioration in the labour-market data.”

“A single weak data point in this notoriously volatile series, especially following a prolonged period of strength, may not be sufficient to prompt a rate cut.”

“Falling construction activity could lead to significant job losses in the construction space; a large portion of over 100,000 construction jobs created in 2017 will likely be lost.”

“We expect the unemployment rate to pick up significantly from its current lows, but not yet. The labour-market data’s inherent volatility means the central bank will likely require consistent and significant data deterioration to cut rates; they would likely discount a single bad print. However, we expect the markets to be more responsive to bad data, while discounting any positives.”