The Australian Dollar is trading higher on Thursday following the release of a bullish jobs report for September earlier in the session. According to a government report, Australia’s unemployment rate fell marginally to 5.2 percent in September, on a seasonally adjusted basis.
The news was good enough to spark an intraday spike higher in prices because it was an improvement over the previous month’s result (5.3 percent), but it is still worse than the decade low it reached in February (4.9 percent).
At 05:37 GMT, the AUD/USD is trading .6786, up 0.0026 or +0.39%.
The drop in the unemployment rate may not be signaling an improving labor market picture, following three rate cuts by the Reserve Bank of Australia (RBA) since June. The drop in the jobless rate was likely fueled by a fall in the participation rate to 66.1 percent.
The report also showed 14,700 new jobs were created last month, but that was just over half of the average (26,300) in the past six months. Nevertheless, it was a sufficiently high number to keep annual unemployment at 2.5 percent.
RBA Deputy Governor: Housing Downturn Will Be a Larger-Than-Expected Drag on Economy
Before the release of the jobs data, a senior Reserve Bank official said, Australia’s property downturn is not only hitting household consumption, it’s a big drag on economic growth and inflation. This is likely to last for at least another year despite three interest rate cuts, RBA Deputy Governor Guy Debelle said in a speech on Tuesday.
Experts are saying the jobs report will allow the RBA to relax a little, however, the improvement is not likely to last over the long-run.
“The RBA will breathe a sigh of relief,” Capital Economics’ senior economist Marcel Thieliant said. “But we think it won’t be long before unemployment starts to rise again, forcing the RBA to provide additional stimulus.”
“We are sticking to our forecast that the unemployment rate will climb to 5.5 percent by early next year.”
Today’s early rally is likely being fueled by a drop in the chances of an RBA rate cut at its November 5 meeting. The chances of the RBA trimming interest rates at its next policy meeting have dropped to 27 percent, according to Refinitiv market data. Earlier in the week, it was as high as 59 percent when the Reserve Bank released the minutes of its latest meeting, during which it cut rates to a record low 0.75 percent.
This article was originally posted on FX Empire
More From FXEMPIRE:
- AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Spikes Higher as Unemployment Rate Improves Slightly
- Ethereum and Stellar’s Lumen Daily Tech Analysis – 17/10/19
- USD/JPY Forex Technical Analysis – Strengthens Over 108.985, Weakens Under 107.598
- Economic Data and Brexit Keep the GBP and USD in Focus
- Gold Price Futures (GC) Technical Analysis – Trying to Establish Support Base at $1489.20 to $1481.30
- The Crypto Daily – Movers and Shakers -17/10/19