The Australian Dollar lost almost a percent against all the majors including the US Dollar (AUD/USD) yesterday after the release of the January unemployment data.
The result was expected to be an increase on the previous month’s result which had been at 6.1%, experts forecasting a slight increase to 6.2%. The result shocked the market and caused a significant sell-off in the Australian dollar when The Australian Bureau of Statistics released the latest figure at 6.4%. This result is the highest level on unemployment experienced in Australia in 12 years.
The Australian Dollar to US Dollar dropped to a fresh low of 76.40 US Cents following the news. Contributing to the sell-off was the number of jobs fell by 12,200 in January. More importantly the number of full-time jobs fell by 28,100, the differential off-set by part-time employment added.
JP Morgan economist Tom Kennedy spoke with the media following its release stating that it was a ‘shocking report all round’. ‘It really does suggest that the Australian labour market is still softening and that’s a trend we think will continue over the next few months, pushing the unemployment rate towards 6.5 per cent and maybe a little bit higher,’ he said.
The Reserve Bank of Australia (RBA) cut interest rates by 25 basis points at the first meeting of the year last week and this disappointing result for employment is leading to further substantiation that we will see another interest rate cut as early as March.
The AUD/USD Exchange Rate was able to claw itself back above the 77 US Cents range during the offshore session overnight with the release of disappointing data out of the US in the form of Retail Sales and Job Figures.
The US Retail sales fell for the second month in a row for January indicating consumer spending decreased by 0.8% on the previous month, following on from December where the figure had already fallen by 0.9%. The Department of Commerce has stated that a major contributing factor for this reduction is falling petrol prices.
Tonight the US will release the University of Michigan (UoM) Consumer Sentiment the previous result was a positive outlook of 98.1 and this month’s figure is expected to increase to 98.2, if this figure comes in line with expectations as above we may see the AUD/USD Exchange Rate give back all the gains made overnight.
The AUD/USD Exchange Rate is currently trading at 77.31 US Cents at 8:15 AM AEST Today.
Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Hits a New Low
After the release of the Australian unemployment data the AUD/GBP Exchange rate fell almost 1%.
During the offshore session last night the Bank of England released their quarterly Inflation Report. BoE Governor Mark Carney stated that he expected inflation to continue to decline to possibly below zero in the coming months due to falling petrol prices however noted that he did not consider this to be an indication that the UK is experiencing deflation.
‘The UK is not experiencing ‘deflation’ he stated in his letter to Minster George Osborne. The stance of the BoE is that inflation will recover to hit the target rate of 2% within the next two years.
Following the report the AUD/GBP Exchange rate fell to a noteworthy low of 0.4990.