Author: Steve Oram
The Australia Dollar has given back most of the gains made yesterday after better than expected employment data and opens again at same levels as before the data. The Euro fell to a 6 week low as ECB President Lagarde struck a slightly more dovish tone than many had expected. Earlier the ECB kept interest rates steady as expected.
The chances of a RBA rate cut next month reduced as Australian employment data came in above expectations yesterday. The Aussie jumped by almost half a cent as employment rose by 29,000 in December vs expectations of 10,000, while the unemployment rate fell to 5.1% vs 5.2% expected.
Although headline data was good there are some concerns as to the quality of the jobs that are being created – the average worker compared with a year ago is working fewer hours. Labour market slack is seen too high, a major contributor to why wage growth is so shallow. Prognosis is also pessimistic as the the effects of the devastating fires expected to hurt an already sluggish economy.
The Day Ahead
Local focus will be on this mornings NZ Q4 inflation data with markets expecting a CPI reading of 0.4% for the quarter with annual growth at 1.8%. Further afield we have manufacturing data out of the US, UK, and Euro Zone tonight.
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