Australian Dollar Tumbles as Jobs Report Spurs RBA Rate Cut Bets
Date
2/18/2016 1:31:32 AM
(MENAFN- DailyFX) Talking Points:
The AUD/USD tumbled after January’s Australian Jobs Report was released The country lost 7.9k jobs the unemployment and participation rate went up Worse-than-expected data likely fueled RBA rate cut bets as bond yields fell Find Key Turning Points For The Australian Dollar With DailyFX SSI The Aussie Dollar declined against its US namesake after Australia released its January jobs report. The data showed that the country lost 7900 jobs instead of an expected 13000 increase. This marks the strongest contraction since April 2015. Meanwhile the unemployment rate shot up to 6.0 percent from an expected hold of 5.8 percent. This marks the highest level since September 2015. Most of the jobs lost can be traced to the full time figures which saw a contraction of 40600 employees. This was the highest amount of full-time positions lost since October 2013. On the bright side part-time experienced a growth of 32700 employees which was the most gained since November 2014. In addition the labor force participation rate increased to 65.2 percent matching analysts’ expectations. This means that while more people entered the labor force not all of them could find a job. This could perhaps contribute to the unemployment rate rising to 6.0 percent. As the data crossed the wires Australian 2-year government bond yields declined as much as 2.65 percent. This suggests that today’s jobs report likely fueled RBA rate cut expectations. The central bank stated in its first monetary policy announcement of 2016 that employment growth should increase gradually through the forecasted period with some amounts of uncertainty to the outlook. They also have a data-dependent neutral approach for interest rates. With overnight index swaps pricing in at least one rate cut from the RBA over the next year today’s data appeared to show that the markets see one happening sooner rather than later.
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