Australian employment was the market focus yesterday and had been the focus for the week pre-leading. The market liked the employment figures yesterday and the Aussie dollar jumped up on the back of the report, however there may have also been a few negatives.
The unemployment rate dropped from 6.1% to 5.8% which was seen as a positive, however this was largely due to an unexpected decrease in the participation rate which has recently been close to the lowest levels since the late 70s. Full-time employment fell by 22.1K jobs, where the big gain was seen was in part-time employment jumping up by 40.2K jobs. The total number of new jobs added being 18.1K, when only an increase of nil to 5K jobs was expected. The market saw the decline in the unemployment rate as a positive and after the Aussie spiked higher against all crosses.
This was followed by Chinese import and export data which did show some positive gains for the Trade Balance figure, however this was largely on the back of the decline in imports being larger than the decline in exports. China is Australia’s largest export market, so low Chinese imports means they were buying less of Australia’s exports.
So the readings were taken as a positive the market liked but also carried a couple of questions of uncertainty.
The Aussie dollar moved lower from the highs reached as an immediate reaction to the employment rate against most currencies, except for the Kiwi Dollar. The Kiwi dollar has been the flavour of the month for the past 12 months. And perhaps has become a tad overvalued against some of its counterparts. The Aussie dollar has recently moved off multi-year lows against the Kiwi and may be becoming slightly more attractive in value-terms to the international community of currency speculators.