145,000 Aussie Jobs Lost in August

AUD

The AUD is trading lower across most major currency pairs this morning. Asian Equities were generally down with Hang Seng closing at its lowest level this year, 1.5% lower, Shanghai Comp closed down -1.3% and the Nikkei posted a minor loss of -0.6%. The ASX outperformed the session finishing up 0.6% after mixed employment figures (see below). Commodities had an ugly offshore session with Iron Ore shedding -6%, Silver down -4% and Gold was also down -2.35%. Yesterday, data published by the ABS revealed that the Unemployment Rate fell to 4.5% in August from 4.6% in July.  However, this seemingly positive number masks the underlying damage the labor market experienced in August. The Participation Rate fell to 65.2% from 66% which tells us that less people are either employed or actively seeking employment. In other words, the size of the total labor force has shrunk which is what allows the unemployment rate to improve even though jobs are being lost. What is perhaps more illustrative of the situation, monthly hours worked decreased by 66 million hours and there were 146K jobs lost, far exceeding market expectation of a loss of 70k. Underemployment was also markedly up to cap off what was a disappointing health check of the workforce as it struggled with the widespread lockdowns last month. There is no notable domestic data on the docket headed into the weekend.

USD

The AUDUSD pair remained on the backfoot overnight, edging lower to trade at 0.7294 following the better-than-expected Retail Sales data in the US (see below). US Equities had a choppy session of trade with both the Dow & the S&P down -0.2% while the Nasdaq posted modest gains of 0.1%. Oil fluctuated near a six-week high, with Brent crude rising 0.2% to $75.58 a barrel and Yield on 10-year Treasuries advanced two basis points to 1.32%. To the data overnight the US Census Bureau showed that Retail Sales increased by 0.7% MoM, up from a negatively revised -1.8% and beating expectations of -0.7%. Core measures printed in a similar manner, rising from negative revisions and easily beating expectations, and weekly jobless claims were mixed with initial claims rising from 312k to 332k to fall just short of expectations of 322k while continuing claims fell from 2.852 mio to 2.665 mio to beat expectations of 2.740 mio. Lpoking ahead and only mid-tier data due from the US tonight.

EUR

The AUDEUR pair is trading within tight ranges if not marginally lower, trading at 0.6199 at the time of writing. European Equities closed in the green with the CAC up 0.6% and DAX posted modest gains of 0.2%. Overnight the ECB President Christine Lagarde called for continued cooperation between monetary policy officials and governments as the euro area moves into the next phase of its rebound from the coronavirus slump. The ECB last week decided to moderately slow the pace of bond buying under its 1.85 trillion-euro ($2.2 trillion) pandemic program, while indicating that more fundamental decisions about the future of its stimulus tools will be taken in December. Little in the way of data headed into the weekend with only the Eurozone Core CPI on the docket.

GBP

The AUDGBP followed suit to trade at a loss this morning, trading at 0.5284 at the time of writing. the London Benchmark FTSE 100 posted minor gains of 0.2%. Overnight, the UK recorded 26,911 new cases and a further 158 deaths – with 8,339 patients in hospital. The number of COVID patients in hospital has remained above 8,000 after the health secretary told Sky News pressures on A&E and increasing hospital admissions could trigger the government's "Plan B" for tackling COVID. It’s a quiet data day headed into the weekend with only UK Retail Sales figures this evening, Investors expect an forecast of 0.5% up from their previous contractionary figure of -2.5%.

NZD

The AUDNZD pair bucked the trend to make minor gains, trading at 1.03126 at the time of writing. Both pairs have been at the mercy of the broader US dollar strength following the recent better-than-expected retail sales figures. There is no noteworthy local data on the docket headed into the weekend, however yesterday a Delta case was identified in a truck driver that was outside the Auckland lockdown zone which will have authorities nervously contact tracing.