Another Strong Aus Labour Report
AUD
The Aussie Dollar opens mixed against the majors despite our relatively strong labor market figures yesterday. Employment Change added 39.7K (more than the previous month), also beating expectations of 30.5K. The Unemployment Rate also fell by 0.1% to print at 4.0%, on-expectations. The rising full-time employment and falling Unemployment Rate don't suggest the economy is quite as weak as recent GDP figures suggest, although it's not entirely fair to assess the state of the economy based on one of the most volatile and unpredictable pieces of economic data that Australia produces. Financial markets have already given up much hope of rate cuts from the RBA this year, so yesterday's figures didn't cause much of a stir. Our equities desk saw the ASX +0.4%, Shanghai Comp -0.3% and Nikkei -0.4%. Commodities had a green day with Natural Gas +0.5%, Gold +0.2%, Silver +0.2%, Iron Ore +0.9%, and the only red exception of Crude Oil moving -0.7%. Looking forward, we may have a tentative release of Chinese New Loans today, expected to pick up to 2.25T Yuan after an extremely slow previous figure of 0.73T Yuan last month. The next major event will be the RBA Cash Rate decision and Press Conference, next Tuesday afternoon.
USD
AUDUSD opens lower at 0.6634 after a late-night spike to 0.6675 due to a weak PPI release out of the US, before retracing all of its gains and more. Both Core PPI m/m and PPI m/m fell from previous and missed expectations, with the former printing at 0.0% against an expected 0.3%, and the latter printing at -0.2% from an expected 0.1%. Being so close to the FOMC release, the PPI numbers reinforce the Fed’s rhetoric to be in a position to cut rates before the end of the year. US Unemployment Claims also came in slightly worse at 242K claims against an expected 225K, although with lessened effects on the markets being a weekly release. Moving onto equities, Wall Street had a mixed day with Dow Jones -0.2%, S&P 500 +0.2% and NASDAQ +0.3%. Looking forward, tonight we’ll have the Prelim UoM Consumer Sentiment and Inflation Expectations, followed by the Empire State Manufacturing Index on Monday.
EUR
AUDEUR opens near 6-month highs at 0.6178 after weak Eurozone production figures last night, leading to an overnight rally which has continued this morning. Industrial Production m/m was previously +0.5%, and expected to print at +0.1%, however printed at just -0.1%. Euro equities reacted strongly in the red, with both CAC and DAX losing -2.0%. Looking forward we have Europe’s Trade Balance out tonight, expected to remain relatively flat at 17.0B against a previous 17.3B, and ECB’s President Lagarde speaking on Saturday morning before an economic conference in Croatia.
GBP
AUDGBP opens flat at 0.5198 with no figures out from the UK yesterday. UK equities recorded a red day with FTSE -0.6%, with markets looking forward to Consumer Inflation Expectations released tonight at 6:30pm, which will be released by the Bank of England.
NZD
AUDNZD opens flat at 1.0765 despite 2 pieces of data released this morning, with both bringing little market reaction. The BusinessNZ Manufacturing Index came in slightly less than its previous of 48.8, to print at 47.2 to indicate ongoing contraction in their manufacturing. FPI m/m printed at -0.2% against a previous reading of +0.6% to indicate decreasing food and food services pricing. Looking forward, we have the BusinessNZ Services Index out on Monday morning.