AU jobs beat unable to boost friendless AUDUSD

The Reserve Bank of Australia has consistently maintained it will not raise the cash rate away from its 0.10% emergency setting until inflation is sustainably between two and three percent.

Jobs 3

A key driver of higher inflation needed to reach the RBA's target is higher wages growth. As noted by the RBA, a tighter labour market is required to lift wages growth which takes time.


"In the Bank's central scenario, it takes some years for the stronger economy to feed through into wage and price increases that are consistent with the inflation target." 

Following yesterday's weaker Q2 wage price index at 1.7% y/y vs. consensus of 1.9% y/y, today's better than expected labour force data for July has come as somewhat of a surprise, given the extent of lockdowns across regions of NSW. 

Employment rose +2.2k rise compared to median expectations for a -46.6k fall, and the unemployment rate fell to 4.6% vs. expectations of a rise to 5.0%. The fall in the participation rate from 66.2% to 66.0% partly explaining the lower unemployment rate. Monthly hours worked decreased by 3 million hours. 

The head of Labour Market Statistics at the ABS, Bjorn Jarvis, was quick to point out "The fall in the national unemployment rate in July should not necessarily be viewed as a sign of strengthening in the labour market – it's another indication of the extent of reduced capacity for people to be active in the labour market, in the states with the largest populations." 

The better than expected jobs data means the worst is still to come in August, September, and October. With this in mind, the AUDUSD could not muster anything other than a quick 15 point bounce to .7235 before making fresh cycle lows.

Technically, the path of least resistance is lower for the AUDUSD, and providing the AUDUSD remains below resistance at .7320/30, the decline is expected to continue towards .7000c.


AUDUSD Daily Chart

Source Tradingview. The figures stated areas of August 19th, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.