Aus Hiring Burst Pars Rate Cut Bets
AUD
The Aussie Dollar opens slightly up against all majors, benefiting from strong domestic employment data yesterday. Asian equities closed lower on Thursday as the Shenzhen slid -1.1%, the Hang Seng -1.0% and the Nikkei -0.7%. The ASX managed a 0.9% gain led by industrials & financials. Yesterday's employment figures reflected a persistently "tight" Aussie labour market, squashing any hopes of an interest rate cut from the RBA this year. The Unemployment Rate slid 0.1% to 4.1%. Employment Change figures smashed expectations, with 64.1k jobs added in the previous month (exp. 25.2k), being the sixth consecutive release above the 12-month average of 31.9k. Today, we have China's Unemployment Rate, GDP, Industrial Production and Retail Sales figures to look forward to. Economic growth in China is expected to have slowed slightly from 4.7% y/y to 4.6% y/y. Given recent AUD moves have been largely China-centric, particularly surrounding China's stimulus announcement, any surprise figure today could bring about currency volatility.
USD
AUDUSD opens higher at 0.6698 after yesterday's strong employment report in Australia. Equities saw another steady night on Wall St as the Dow Jones closed +0.4%, the Nasdaq +0.1%, and the S&P 500 flat. Yesterday we had US Retail Sales for September, which printed at 0.4% MoM, up from 0.1% and better than forecasts of 0.3% with Core measures all significantly better than expected. Also released was the Philly Fed Business Outlook for October which rose to 10.3, up from 1.7 and better than expectations of 3.0 while weekly Jobless Claims were modestly better than expected with initial claims falling to 241k against expectations of 258k. Looking forward, next week we have mainly lower tier data out in the first half of the week, apart from the BRICS summit.
EUR
AUDEUR opens higher at 0.6184 after the European Central Bank cut their key interest rate by another 25bps to 3.4% overnight. Equites were up as DAX opened at +0.8% and CAC +1.2%. The ECB's decision to cut rates only 5 weeks after the last cut may be hinting that the Eurozone may be becoming concerned with their economic growth outlook. Further, the Press Conference after the actual rate decision didn’t seem to offer markets much to consider with regards to predicting the direction and size of further cuts. The latest annual Euro area inflation figures sit at 1.7%, missing forecasts of 1.8%, adding to concerns of slowing growth and higher than wanted savings rates. We have lower tier Current Account data out tonight and ECB President Lagarde speaking next week.
GBP
GBP opens up at 0.5140 off the back of yesterday's strong Aussie employment figures. We saw a surge earlier in the day with the pair reaching highs of 0.5158 before retracing and settling around 20 bps lower. Equities showed gains as FTSE closed +0.7%. Today, we have Retail Sales data coming out in the late afternoon. Previous readings came in at +1.0% month-on-month, while forecasts for today’s figure are -0.4%. If we see a higher-than-expected figure, the AUDGBP pair may continue to steadily climb. Mid Next week we have Bank of England Governor Baily speaking as well as Manufacturing and Services PMI to look out for.
NZD
The AUDNZD opens up at 1.1053, mainly driven by the midday rally off the back of strong Australian employment data yesterday. We haven’t seen much data out of New Zealand since the quarterly CPI figures of +0.6% q/q on Wednesday. Looking forward to next week we have mainly lower tier data coming out. In addition, RBNZ Governor Orr speaking is due to speak about monetary policy in Washington DC next week.