Australian Dollar Gains. Job Creation Returns to Health, Smashes Forecasts

Corporate profits and nominal GDP picked up and corporate investments increase. Retail sales and industrial production both beat forecasts, while fixed assets just missed expectations. Foreign direct net investment remains strong, holding on to record highs. Markets care about unemployment and employment growth because they have a direct impact on wage growth, demand within the economy and thus inflation. The currency markets are pretty calm today before two key events tomorrow, the ECB meeting and the UK general election.

Retail spending fell sharply in the affected areas. on capital spending was flat, but housing construction activity remains at historically high levels, according to the report. The economy only created 4,200 full-time jobs, the rest for part-time jobs. Australia’s economy added 22,600 new jobs in April, returning from a small contraction in the number of new jobs in March, which was before market consensus for 19,800 news jobs. SYDNEY – it shrugged the impact of a cyclone in growing rapidly in the second quarter, helped by increasing corporate confidence and stronger exports. Some burgeoning inflation has been seen alongside rising commodity prices and a renewed stabilization of China’s economic situation, boosting hawkish sentiment around the AUD. So, unemployment, if a six before, it’s there, under no circumstances acceptable, ” he said.

Less inflationary pressure from energy caused by the recent jump in oil prices can strengthen their dovish hand more than likely as long as wage growth continues to stagnate. Jobs has improved growth at a solid pace, but in contrast, the unemployment rate has been stuck in a cycle that continues to cause weak wages, ” Mr Haslem said. Subdued wage growth in Q1 was not ideal for the RBA and Australia’s federal government when they hit their respective targets over the next few years.

To see widening exchange rate differences would likely require the RBA to move towards a tightening tendency, or even hike rates over the forecast period. The unemployment rate was in line with market forecasts, although job creation was again a positive surprise. The number has been declining for most of the past 12 months, which is a great sign that the housing bubble in Australia may be about to burst. While GDP may be overlooked as one (at least for now), the balance of payments balance suggests a certain downside risk.

The Bank of Canada is firmly anchored in a rate hike cycle, while the Bank of EnglandandEuropean central bank is also in the process of de-stimulating its respective economies. ANZ Bank does not see the bank changing to a radical militaristic bias in the foreseeable future, Australia sees the laggards in the current global rate cycle, which should see the interest rate differential narrow further. The Reserve Bank of Australia struck a more optimistic tone than usual in its Tuesday monetary policy statement, given an improving outlook for investment and for the job market. It is believed to see annual wage growth of 3% or more than the minimum required for the central bank to meet its inflation target and thereby justify being able to raise interest rates.

Even though the RBA remains on hold there could still be some volatility if the bank are surprisingly dovish or hawkish in Governor Lowe’s statement. It is firmly on hold at a time when a number of major central banks around the world (such as the Fed, ECB and BoE) sound confident. Only yesterday did it confirm the quarter-to-quarter change in growth figures.