Tight Labour Market Could Delay Rate Cuts

AUD

The Aussie Dollar opens up mixed this morning after finishing a rally against majors yesterday off the back of largely stronger than expected domestic employment data. Our Employment Change printed at a massive +116.5k for February, smashing expectations of +39.7k and largely attributed to job positions filled in December / January for commencement in February. The Unemployment Rate also dropped to 3.7% from the previous 4.1%, with the RBA likely glad their commentary wasn't too dovish after the Cash Rate hold at 4.35% on Tuesday. Stronger labour market data should push back prospects of a near-term rate cut, and it will be up to inflation data to make the case for monetary policy easing. Equities closed the session mixed with the ASX up 1.1%, Shanghai Comp at -0.1% and Nikkei up 2%. Today, we’re having the RBA Financial Stability Review and Chinese Foreign Direct Investment ytd/y. All eyes are now on the Aussie CPI set for release next Wednesday.

USD

The AUDUSD reached 0.6634 highs in yesterday's session off the back of strong Aussie labour force data, with the pair retracing overnight to this morning's open at 0.6570. Wall St closed the session in the green with the Dow Jones up 0.7%, S&P 500 up 0.5%, and NASDAQ up 0.2%. The US had some positive data release yesterday; their Flash Manufacturing PMI printed at 52.5 with from forecasts at 51.8, however their Flash services PMI printed short at 51.7. The US Existing Home Sales also printed greater than expected at 4.38Mil, with forecasts at 3.95Mil. Chief Economist Yun mentioned “Additional housing supply is helping to satisfy market demand” and that “Housing demand has been on a steady rise due to population and job growth, though the actual timing of purchases will be determined by prevailing mortgage rates and wider inventory choices." Tonight, we’re going to see Fed Chair Powell Speak at the Liston’s Event in Washington. Later on, FOMC Members Barr and Bostic will speak at the Transnational Law Virtual Conference.
 

EUR

The AUDEUR opens in the green this morning at 0.6049 after yesterday's rally continued into the early evening, reaching 0.6068 highs before giving back some gains in the overnight session. Equities closed in the green with the DAX up 0.9%, and the CAC up 0.2%. Yesterday we saw a flurry of mixed Euro data, the most notable data being the French Flash Manufacturing & Services PMIs both falling short of expectations, printing at 45.8 & 47.8 respectively, and the German Flash Services & Manufacturing PMIs printing mixed at 41.6 & 49.8. For the Eurozone as a whole, the Flash Services PMI printed stronger than expected at 51.5, with speculators mentioning “The takeaway is that manufacturing remains depressed, while the services are growing slowly. Growth impulses remain faint”. Today we’re having the German ifo Business Climate and the EURO Summit. Following suite, a quiet week for the Euro ahead with scattered lower tier data.
 

GBP

The AUDGBP opens in the green this morning at 0.5184 after a strong rally yesterday morning which pushed the pair up over 1%, reaching highs of 0.5194 before giving up only a tiny amount of gains this morning. The FTSE surged about 2% to the highest level in nearly a year, with increased investor confidence after the Bank of England Boss said "We are on the way" to interest rate cuts after holding their Official Bank Rate at 5.25% overnight. We also saw the Flash Manufacturing & Services PMIs print mixed at 49.9 and 53.4 respectively. Tonight, we’re going to see the Retail sales m/m which is forecasted to print at -0.4% from its previous level of 3.4%. We’re expected to have a quiet week following, with no major data set to release.
 

NZD

The AUDNZD opens in the green at 1.0868, climbing 0.4% yesterday and reaching 4-month highs in the night session. Yesterday, we saw the GDP q/q print at -0.1%, below expectations at 0.1%, A public policy report mentioned “New Zealand’s economy got 0.1% smaller in the last three months of 2023, bringing annual growth for the calendar year to just 0.6%”. We also saw their Credit Card Spending y/y print at 2.2% from its previous level of 0%. Next week is going to be very quiet for the NZD with only one piece of data releasing; the ANZ Business Confidence on Thursday.