Unemployment Rate Expected to Remain at 3.5% Today

AUD

The Aussie dollar opens relatively flat against most majors, despite experiencing a brief downturn in the aftermath of weaker-than-expected wage data yesterday. In the March quarter 2023, the seasonally adjusted Wage Price Index was grew +0.8% (expectations +0.9%) with the most significant contributors to wage growth being Education and Training Services. Asian equities were mixed with the Hang Seng falling -2.1% while the Nikkei added +0.8%. The ASX closed the session down -0.5% as miners dragged the index lower. Today we’ll see Australia’s April employment report, with the Unemployment Rate expected to remain stubbornly low at 3.5%. Economists are expecting employment growth of +20k m/m, which would suggest a minor decline in the employment-to-population ratio given the backdrop of strong population growth.

USD

AUDUSD has remained on a steady upward trend since 6pm last night, opening at 0.6660 this morning. Improved US debt ceiling negotiations & perceived lower risks of default shifted sentiment higher overnight, helping the NASDAQ +1.3% while both the Dow Jones and S&P 500 closed the session +1.2%. Given recent banking turmoil and debt ceiling concerns, data are playing a secondary role at the moment, and today we’ll only see some housing data for April which could potentially soften the decline witnessed in home loan applications. In terms of the Fed, we’ll hear from FOMC’s Goolsbee and Bostic.

EUR

AUDEUR gained some ground between 4pm and 11pm yesterday before plateauing to open at 0.6144. European equities were also relatively flat with the DAX +0.3% and CAC -0.1% Pretty quiet in terms of data, while the domestic story for the Euro isn’t deteriorating materially, despite recent ZEW figures from Germany producing worrying signals (the Index’s 3rd consecutive loss has evaporated any growth optimism present from the start of the year). No major data from the Eurozone today, while ECB President Lagarde will deliver a pre-recorded video speech on post-pandemic challenges tomorrow evening.

GBP

An uneventful session leaves AUDGBP opening at 0.5332, while the FTSE remained unchanged overnight. The Bank of England’s Hunt said the UK was on a path where they will bring inflation down, while the central bank’s Governor Bailey noted things are ‘looking brighter’ than they did a couple of months ago. There are no market-moving pieces of data for the remainder of the week, while eyes remain fixed on next week’s UK inflation data. If the rate of inflation falls, this could pair with the recent slowdown in wage growth & lend the BOE toward s pausing its tightening cycle in June.

NZD

AUDNZD furthers its recent downward trend, opening at 1.0661 ahead of today’s annual budget release. NZ’s Prime Minister Chris Hipkins has already labelled it a “no frills” budget that wont contain much in the way of significant additional spending, while the government has been warned by the RBNZ that an extravagant fiscal package could be countered by even higher interest rates. Overall, New Zealand faces rising debt and longer-than-expected period of budget deficits given large-scale natural disasters and a squeeze on government finances. Economists expect a return to surplus in 2026.