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Disappointing employment data weakens the AUD

Published September 20, 2019

Author: Dennis Li

Yesterday’s local employment data showed 34,700 jobs were created in July, more than three times the market’s expectation. While the main driver is part-time jobs, full time employment fell by 15,500. The unemployment rate worsened to a one-year high of 5.3% as more people look for work, reinforcing expectations for the RBA to cut the cash rate by 25 bps in October.

AUDUSD broke through the 0.6800 support level while the AUDEUR lost support from the 100-day Moving Average level of 0.6170. The USD index fell last night as a result of Thursdays 0.25% cut.

Central banks overnight, the BoE voted 9-0 to keep the benchmark rate at 0.75% but warned that a no-deal Brexit would hit the economy. Japan and Switzerland also kept deeply negative interest rates on hold while Norges Bank increased its key policy rate to 1.5%, moving its rates in the opposite direction of Europe and the US.  The Bank of Japan kept its rate guidance unchanged but hinted towards monetary easing at the next meeting.

The latest China-US trade talks conclude today, markets will keep an eye on the outcome, possibly providing a little certainty to the markets.