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Forex pairs in this Article » USD, AUD/USD, AUD/JPY, EUR/AUD
Talking Point:

  • The Australia Employment Change came in at 21.0K vs. 10.0K Expected, -0.7% October
  • RBA interest rate expectations still do not see a 25bp hike over the next 12 months
  • US Dollar keeping the hawkish pressure on as investors weigh on Fed taper
AUD/USD surged Thursday morning in Sydney after the November Australia employment data reported a 21.0K increase in payrolls for November – materially better than the 10.0K expected and 1.1K recorded in October. The Aussie dollar advanced as much as 37 pips to 0.9080 after the data but soon erased those gains. Similar price action was observed elsewhere as AUD/JPY had an initial 35-pip run to 92.78 and EUR/AUD temporarily dropped 38 pips to 1.5224. The report echoed the encouraging fundamental lean of the Consumer Inflation Expectation gauge released earlier which that rose to 2.1% in December from 1.9% the previous month.

The better-than-expected Job data supports a pickup in Australian economic growth, which may eventually encourage the RBA to shift away from its rate cut regimes to an eventual hike. That hawkish interpretation, however, is struggling to take hold. The 12-month interest rate forecast still does not reflect a market forecast for at least one 25bp hike. With the RBNZ pricing in over 100 bps over the same period, the contrast is too remarkable to ignore.

Meanwhile, even non-carry currencies are gaining traction. The greenback specifically is being buoyed by expectations that the Fed will taper at one of its next two meetings – perhaps as early as the December 18 decision. So, even though the US yield is at a significant discount to its Australian counterpart, its bearing is significantly more ‘hawkish’.

Data at a Glance

- Australia Consumer Inflation Expectation: 2.1% in December, from 1.9% in November

- Australia Employment Change: 21.0K vs. 10.0K Expected, from -0.7K Prior. (Revised lower from 1.1K)

- Australia Unemployment Rate: 5.8% vs. 5.8% Expected, from 5.7% Prior.

- Australia Full-time Employment Change: 15.5Kin November, from -31.1K in October.(Revised lower from -27.9K)

- Australia Part-time Employment Change: 5.5Kin November, from 30.4K in October. (Revised higher from 28.9K)

- Australia Participation Rate: 64.8% vs. 64.8% Expected, from 64.8% Prior.

- Australia Credit Card Balances: $A48.9Bin October, from $A48.8B in September.

- Australia Credit Card Purchases: $A23.0Bin October, from $A22.0B in September.

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Aussie_Spike_was_Short_Lived_After_Firm_Australia_Job_Data_body_aussie_employment_change.png, Aussie Spike was Short Lived After Firm Australia Job DataAussie_Spike_was_Short_Lived_After_Firm_Australia_Job_Data_body_aussie_unemployment_rate.png, Aussie Spike was Short Lived After Firm Australia Job DataAUD/USD 5-minute Chart: December 12, 2013

Aussie_Spike_was_Short_Lived_After_Firm_Australia_Job_Data_body_aud_job_data.png, Aussie Spike was Short Lived After Firm Australia Job DataChart created by Cheng Li using Marketscope 2.0

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-- Written by Cheng Li, DailyFX Researcher. Feedback can be sent to cli@fxcm.com

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