The Australian dollar extended gains for the fifth consecutive days after the Australian Bureau of Statistics (ABS) released a better-than-expected November job report. Although the unemployment rate held steady at 5.4%, employment increased by 61,600 (seasonally adjusted), beating widely median forecast of 19,000. Moreover, the good news is that most of those news jobs are full time jobs (+41,900). Part time jobs increased by 19,700. Finally, the unemployment rate held steady for the simple reason that the participation jumped to 65.5% from 65.2% in the previous month.
This is definitely a good news for the Aussie economy, as it would translate, over time, into firmer price pressures, which could only please the RBA and help in its mission to lift inflation within 2%-3% target range.
Since the beginning of the week, the Aussie has gained more 2.50% against the greenback. AUD/USD is currently testing the $0.77 resistance area (high from 7th November and psychological threshold). Beside the positive push from rising commodity prices, the interest differential between US 2y yield and Australia ones has started to widen slightly since the beginning of the month increases incentives to go long Aussie.
By Arnaud Masset