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Australian Employment numbers better than expected

Written by Sam Coxhead on July 7th, 2011.      0 comments

11:50 AM (AEST) Greetings,
Just released Australian Employments numbers show a stable unemployment rate of 4.9%, and employment jobs growth was driven by an increase in fulltime employment of 59k, that was partially offset by the drop on part-time employment by 36.5k. These numbers were better than expected and has seen the AUD gain ground across the board.
The AUD had been trading a tight range in offshore markets as the EUR was under pressure and the Chinese hike of the interest rates by 25pts loomed as negative factors for both the AUD and NZD.
The state of the employment market is definitely a major factor the Reserve Bank of Australia considers when looking at the cash rate. A strong number such as this will add weight to a move higher in the cash rate before the end of the year. If we see pick up in the recently softer numbers, the chances of a hike from the RBA will increase. Given the global risks in the market at the moment, their current “wait and see” attitude is prudent in my view. But if we see a rebound in the other statistics along with the tight labour market, then a hike before the end of the year will definitely be on the cards, and of course this would be AUD positive.  
The NZD has been pushed lower as investors sell NZD and buy AUD. The NZD has had a particularly good run against the AUD of late, so some kind of profit taking was to be expected on a strong number such as this. The NZD against the AUD is a highly favoured pair to trade by hedge funds and institution. The weight of the NZD can be seen in its drop against the other currencies since the number.
This number brings an end to the domestic Australasian focus for the week. Tonight we have the Bank of England and European Central Bank make monetary policy decisions, and tomorrow sees the important US employments released. Expect some volatility in the next 48 hours, especially with increased uncertainty in European debt markets once again.
          Past 24 hours
  Current level Pre- AU Employ  % Chge AU Employ   Low High
NZD/USD 0.8260 0.8277 -0.21%   0.8249 0.8302
AUD/USD 1.0738 1.0695 0.40%   1.0655 1.0733
NZD/AUD 0.7694 0.7740 -0.60%   0.7715 0.7750
AUD/NZD 1.2997 1.2920 0.59%   1.2904 1.2961
NZD/GBP 0.5161 0.5172 -0.21%   0.5154 0.5182
NZD/EUR 0.5766 0.5779 -0.23%   0.5730 0.5787
NZD/YEN 66.81 66.99 -0.27%   66.68 67.12
NZD/CAD 0.7973 0.7995 -0.28%   0.7952 0.8012