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The Aussie just shrugged off the persistent risk-off vibes and tumbling commodity prices during the session, apparently because traders were more focused on Australia’s jobs report. The yen, meanwhile, stopped its advance and even began to retreat, despite Japan’s better-than-expected GDP report and another round of risk aversion.

  • Japans’s preliminary Q1 GDP q/q: 0.5% vs. 0.4% expected 0.3% previous
  • MI’s Australian inflation expectations: 4.0% vs. 4.1% previous
  • Employment change in Australia: 37.4K vs. 4.5K expected, 60.0K previous
  • Australia’s jobless rate: 5.7% vs. steady at 5.9% expected

Major Events/Reports:

Australia’s April jobs report

According to the latest jobs report from the Australian Bureau of Statistics, Australia’s seasonally-adjusted jobless rate held dropped from 5.9% to 5.7% in April as the number of unemployed blokes and sheilas dropped from 751K to 732K. This is great because it’s the lowest jobless rate since January and beats expectations that it would hold steady at 5.9% to boot.

Moreover, the improvement in the jobless rate is apparently healthy since the labor force participation rate actually very slightly improved from 64.78% to a none-month high of 64.80%.

In terms of job growth, the Australian economy generated a net increase of 37.4K jobs in April. This is obviously much more than the consensus of a +4.5K, although it is a fewer than the 60.0K jobs generated in March.

On a more downbeat note, the net increase in jobs was due to the 49.0K increase in part-time jobs, which was partially offset by the 11.6K decrease in full-time jobs. This is the first decrease in full-time jobs after two months of very solid increases.

Another disappointment bit from the jobs report was the 0.26% fall in monthly hours worked to 1,659.5 million hours.

Japan’s GDP report

Japan’s Q1 GDP grew by 0.5% quarter-on-quarter, according to the preliminary GDP report from the Japanese Cabinet Office.

This is faster than the +0.4% consensus as well as Q4 2016’s +0.3% rate of expansion. In addition, Q1’s +0.5% growth is the fastest quarterly growth in four quarters, as well as marking the second quarter of faster growth.

Looking at the details, growth was driven mainly by private demand contributing 0.4% to GDP growth. And half of the positive contribution from private demand came from the 0.4% increase in private consumption. The other half, meanwhile, came from the 0.7% increase in private residential investment and the 0.2% increase in non-residential investment.

The other driver of growth was net trade, which accounted for the remaining 0.1%. And trade had a positive contribution, thanks to the 2.1% increase in exports, which was able to overpower the 1.4% increase in imports.

Risk aversion domination in Asia-Pacific

Risk aversion ran rampant for yet another day since equity indices from the Asia-Pacific region got another smackdown.

  • Australia’s ASX 200 was down by 1.18% to 5,717.80
  • New Zealand’s NZX 50 was down by 0.62% to 7,376.67
  • The Shanghai Composite was down by 0.33 to 3,094.09
  • Hang Seng was down by 0.32% to 25,212.00
  • The Nikkei Index was down by 1.38% to 19,542.50
  • KOSPI was down by 0.41% to 2,283.61

As usual, market analysts are blaming the feelings of doom and gloom on risk sentiment spillover from Wall Street caused by the ongoing political drama in Washington.

Major Market Mover(s):

AUD

The Aussie had a mixed performance but was mostly weaker ahead of Australia’s jobs report, very likely because of the downbeat mood. But when the jobs report was released, the Aussie shot higher across the board and never looked back. There were some disappointing components, though, so it would be interesting to see if the Aussie would be able to extend or at least hold onto its gains during the European session.

AUD/USD was up by 24 pips (+0.33%) to 0.7456, AUD/JPY was up by 59 pips (+0.72%) to 82.94, AUD/CHF was up by 43 pips (+0.59%) to 0.7313

JPY

Despite another round of risk aversion in the Asia-Pacific region and a better-than-expected GDP report for Japan, the yen ended up as the weakest currency of the session. There were no other apparent catalysts but U.S. bond yields were on the rise during the Asian session, and that may have enticed some yen bulls to take profits off the table after yesterday’s impressive run. And for reference, U.S. 10-year bond yields were up by 1.24% to 2.243% during the Asian session.

USD/JPY was up by 53 pips (+0.48%) to 111.24, EUR/JPY was up by 30 pips (+0.25%) to 123.91, CHF/JPY was up by 27 pips (+0.24%) to 113.40

Watch Out For:

  • 8:30 am GMT: Headline (1.1% expected, -1.8% previous) and core (1.0% expected, -1.5% previous) reading for U.K. retail sales