Matt Simpson, CFTe, MSTA
CityIndex
121k jobs in 31 days? That is an impressive 3900 per day. Something is wrong somewehere - we are just not sure where at the moment.
Only last month we saw unemployment rise from 6% to 6.4%, a 12-year high, and reminding the markets of Glenn Stevens earlier comments that "expect unemployment to rise before it becomes lower". I suspect he was talking more than a couple of months horizon though.
Job ads were up 0.1% m/m earlier this week and whilst this gave an expectation of improved employment not many (if any) saw this number coming in today. Australia has not witnessed over 100k jobs created in a month since 2003, so nobody was expecting such a whopper this month. However whilst the number in itself is impressive it should also be remembered that this is a volatile number at the best of times and this is only the 2nd month since the new calculation method has been used.
Technically:
That didn't stop the market reacting to see A$ break up through 92c resistance, which only this morning looked like an uphill struggle. Whilst the Australian Dollar continues to enjoy the bounce form the lows the bigger picture remains bearish from a technical perspective. The Weekly charts have been exhibiting a topping formation for some time and only yesterday confirmed a Head and Shoulders Pattern to project downside targets around 89-90c. I expect traders to begin fading any rallies below 0.924 once the excitement has dies down from today’s figures.
Moving On:
With the headline domestic figure over for the week the markets will now focus on FOMC staff projections and rate statement next week, where markets are continuing to price in a Hawkish outlook for the US. But with high expectation already priced in, we should also be on guard for some Greenback losses should the FED fail to deliver. Again.
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