Looks like Aussie bulls came out to play last week. Will Australia’s jobs numbers make or break the bullish run?
Employment numbers (Oct. 18, 12:30 am GMT)
Aussie bulls celebrated last month when the employment change, unemployment rate, and labor participation rate all printed much better than analysts had expected for the month of August.
This week market geeks are looking for a net addition of 15,200 jobs (against last month’s 44,00 increase) while the unemployment rate is expected to maintain its 5.3% reading.
Improvements in the labor market is one of the reasons why the RBA has been pretty chill (read: neutral) in its forward guidance and monetary policies lately.
If the report prints more better-than-expected reports, then Governor Lowe and his team might find a case (still not a strong one) for adopting a hiking bias.
Of course, the strength of the speculations will depend on how strong (or weak) this week’s numbers will print. Make sure you’re around to see the release, aight?
Last Week’s Price Review
After last week’s beat-down, the Aussie is turning in a good performance this week since it’s currently in third place (as of 6:00 am GMT).
And Aussie bulls can thank Trump and the Greenback’s overall weakness for the Aussie’s gains this week.
Gold prices and the yuan were both in decline on Monday (and risk aversion prevailed to boot), but the Aussie encountered buying pressure from the get-go, probably because of news over the weekend that the PBoC decided to cut the reserve requirement ratio (RRR) by 100 basis points, although profit-taking after last week’s AUD beat-down seems like a more probable reason since, as noted earlier, the yuan was lower on the day.
At any rate, risk aversion initially prevailed on Tuesday, but more buyers emerged to keep the Aussie supported, likely because of the stronger reading for the NAB business confidence index.
It’s also probable that the Aussie may have also been taking directional cues from gold and the yuan, as well as rising iron ore prices.
Sadly for the AUD bulls, risk aversion made a comeback during Wednesday’s London session and even intensified during Wednesday’s U.S. session, so the Aussie was forced to return its gains on most pairs (except on AUD/CAD).
However, gold prices rose, the Greenback wobbled, and support for the Aussie began to form after Trump said the following:
“I think the Fed is making a mistake. They are so tight. I think the Fed has gone crazy.”
The Aussie then climbed broadly higher throughout Thursday’s morning London session. There were no fresh catalysts, but Greenback weakness and rising gold prices likely continued to entice more AUD bulls to attack.
The Aussie’s rise would finally stall during the later half of Thursday’s U.S. session, likely because of the risk-off vibes at the time.
Selling pressure was limited, though, and there were even signs of risk-taking on Friday, so the Aussie was able to cling to its gains on most pairs.