ABS Job Report AUDUSD Impact Analysis


 Australian Bureau of Statistics (ABS) data shows that employment has risen by 61,600 to 12.4 million in seasonally adjusted terms.  However, the Aussie has gained more 2.50% against the U.S Dollar, hence prompting the ABS Job Report AUDUSD Impact Analysis.

15 December, Swissquote – The Australian dollar extended gains for the fifth consecutive days after the Australian Bureau of Statistics (ABS) released a better-than-expected November job report. Although the unemployment rate held steady at 5.4%, employment increased by 61,600 (seasonally adjusted), beating the widely median forecast of 19,000. Moreover, the good news is that most of those new jobs are full-time jobs (+41,900). Part-time jobs increased by 19,700.

Finally, the unemployment rate held steady for the simple reason that the participation jumped to 65.5% from 65.2% in the previous month.

ABS Job Report AUDUSD Impact Analysis

This is definitely a good news for the Aussie economy, as it would translate, over time, into firmer price pressures, which could only please the RBA and help in its mission to lift inflation within 2%-3% target range.

Since the beginning of the week, the Aussie has gained more 2.50% against the greenback. AUD/USD is currently testing the $0.77 resistance area (high from 7th November and psychological threshold). Beside the positive push from rising commodity prices, the interest differential between US 2y yield and Australia ones has started to widen slightly since the beginning of the month increases incentives to go long Aussie.

ECB meeting: Draghi is buying time

The ECB meeting did not bring anything new to the table. The European Central Bank has held its rates unchanged and increased its forecast for growth for the next years. In addition, officials believe that the inflation won’t reach the target by 2020. This is what we call “Buying Time” to actually let inflation run.

It is without surprise that ECB members renewed their commitment regarding the asset purchase program that should run until next September. The amount added to the overall money supply each month is clearly massive and growth is exponential. Mario Draghi was very happy with “the strong pace of economic expansion” as well as the usual “improvement in the growth outlook”. Unfortunately, we did not have a word concerning the cost of the growth. The truth is that one euro of growth costs way more than what it brings.

As for the Fed, the key for the ECB is to let inflation run without raising rates in order to kill the massive debt accumulated. By stating that the inflation is too low, the ECB is selling a dovish message that markets are too happy to buy as assets never stop to increase. And then the ECB is getting time hoping that inflation goes higher.

Disclaimer

This article ‘ ABS Job Report AUDUSD Impact Analysis ‘ was written by Arnaud Masset and Yann Quelenn, Market Analysts at Swissquote.

While every effort has been made to ensure that the data quoted and used for the research behind this document is reliable, there is no guarantee that it is correct, and Swissquote Bank and its subsidiaries can accept no liability whatsoever in respect of any errors or omissions, or regarding the accuracy, completeness or reliability of the information contained herein.

This document does not constitute a recommendation to sell and/or buy any financial products and is not to be considered as a solicitation and/or an offer to enter into any transaction. This document is a piece of economic research and is not intended to constitute investment advice, nor to solicit dealing in securities or in any other kind of investments.

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