The Australian dollar was dodged after a slight error in jobs data. Will AUD/USD Recover?

AUSTRALIAN DOLLAR, AUD/USD, RBA, ABS, Monthly CPI – Talking Points

  • Aussie dollar eased after benign jobs report
  • Overall employment was unchanged against hopes for a slight gain
  • US Dollar Could Top AUD/USD Ahead of CPI Data Next Week

Recommended by Daniel McCarthy

Get your free AUD forecast

The Aussie dollar slipped slightly after today’s jobs report. The September unemployment rate was unchanged at 3.5% versus 3.5% expected.

The overall employment change for the month was 0.9k instead of the expected 25k. Full-time employment increased by 13,300, while 12,400 part-time jobs were lost in August.

Turnout printed as expected at 66.6% and the same as the previous month.

Going into the data, the futures market saw a 24 basis point (bp) rate hike by the RBA in October and, unsurprisingly, that remains the case.

image1.png

Chart created in TradingView

The RBA blinked earlier this month when it surprised the market at its monetary policy committee meeting by hiking just 25 basis points (bps) instead of the expected 50 bps. Next week’s CPI reading for the third quarter will be in focus to see if the bank should re-accelerate the tightening or not.

This created a kind of “catch-22” situation for the central bank. Turning relatively dovish, the Australian dollar fell to new lows not only against the US dollar, but against all trading partners.

Overall, if this trend were to continue, it could contribute to an environment where inflation could be imported. In this situation, domestic consumers are encouraged to substitute foreign goods and services for domestic alternatives, which further fuels the local economy.

image2.png

Chart created in TradingView

Next week’s Australian CPI will mark the start of a new era for the Australian Bureau of Statistics (ABS) in measuring and reporting data.

The quarterly CPI will remain the primary gauge of inflation, but they will also release a monthly reading of price changes. Until now, Australia and New Zealand were the only two developed economies not to do so.

This new monthly release will include 62-73% of the basket used to measure the quarterly figure. More information can be found on their website here.

AUD/USD continues to be battered by swings in the US Dollar which are being generated by a stoic Fed battling to rein in the highest inflation in 40 years.

The US CPI saw further accelerating price pressures last week, contributing to market expectations of another 75 basis point rise at the upcoming Federal Open Market Committee (FOMC) meeting in the Fed early next month.

The rhetoric from the speakers remains decidedly hawkish and if this continues, the ‘big dollar’ could continue to appreciate, undermining the AUD/USD.

Recommended by Daniel McCarthy

How to trade AUD/USD

— Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter

Leave a Reply