AUD/USD: Got Me Under Pressure - Westpac
Research Team at Westpac, suggests that today’s April labour force data
suggested that Australian wages growth will remain muted until further
“The 11k rise in total jobs was very close to expectations and the 5.7% unemployment rate a touch below consensus. But attention quickly turned to soft points in the details of the report. As Justin Smirk of our Economics team notes, part-time employment has grown 160.9k (4.5%yr) while full-time employment has growth 83.8k (1.0%yr). Given that full-time employment represents 69% of total employment, the fact that in in the last year we have added twice as many part-time employees as full-time employees really highlights the signify cant shift the economy is experiencing, partly due to the ongoing fall in mining investment.
Justin also noted the softer than expected participation rate and a slightly worrying -1.1% m/m decline in total hours worked in April, after -1.1% in March. This helped nudge AUD/USD under 0.7200 for the first time since 2 March, when Australia’s strong Q4 GDP data sparked a rally that exceeded 6 cents by late April.
The RBA minutes on Tue helped AUD/USD stem its losses and pricing for a June or July rate cut should remain fairly low in the week ahead. But there is still considerable room for markets to price in greater risk of a Fed hike at any of the next few meetings, supporting USD. A degree of resilience in commodity prices should help AUD on crosses but as a high beta USD play, AUD/USD seems set to remain under pressure for now.”