Australia’s job market gained jobs for a third straight month, beating expectations once again. These results pushed AUD/USD higher, after being blown by the American Non-Farm Payrolls on Friday. The Australian and American fundamentals continue to remain very different.
Image credit: Martin Kingsley on Flickr
Australian employment change came out far better than expected: a rise of 31,200 jobs, instead of 5,300 net gains that were expected. This is 6 times the early expectations. This adds to last month’s rise of 27,200 jobs. This figure was revised upwards from the initial release. Also the previous month saw a big gain, of 40,000 jobs.
Also the unemployment rate surprised economists: it fell from 5.8% to 5.7%, while it was expected to tick up to 5.9%. All these numbers show great strength for the Australian economy, and set the path for another rate hike – the fourth in a row, in the next RBA meeting.
The Aussie gained on this release: AUD/USD rose from 0.9090 to 0.9160 instantly, and held these gains. The Aussie also gained against other currencies.
The Australian dollar was one of the “victims” of the recent American Non-Farm Payrolls report, which sent the greenback up across the board. The high yielding, carry-traded Aussie was abandoned on the good American data.
This report from Australia puts things in proportion once again. The US is losing jobs for almost two years. No gains were reported – only a smaller-than-expected loss of jobs. Unemployment rate in the US fell back to…10%, while Australia’s rate is under 6%.
The Non-Farm Payrolls also created hopes for a rate hike in the US. These hopes were shattered in Bernanke’s speech on Monday. Australia’s interest rate is at 3.75%, and expected to rise soon, not at an extended period of time.
I continue to be bullish on the Aussie. It’s summertime in the land down under…
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