Boris Schlossberg
BK Asset Management
Market Drivers June 13, 2019
AU labor data beats but Aussie falls
UK Parliament blocks Labor move on no deal Brexit
Nikkei -0.46% Dax 0.58%
UST 10Y 2.11%
Oil $52/bbl
Gold $1336/oz.
Europe and Asia:
AUD AU Labor 42K vs. 16K
EUR EU Industrial Production -0.5% vs. -0.4%
North America:
USD Weekly jobless 8:30
Australian data beat its mark today coming in far better than expected, but the currency sold off on the news as the headline data hid the underlying slowdown in labor demand.
Australian jobs printed at 42K versus 16K eyed, but almost all of the gains came from the lower value part-time jobs, with full-time jobs only expanding by slightly more than 2K in May. The market read the news as a disappointment especially since the unemployment rate climbed from 5.1% to 5.2%, with traders betting that the RBA may be forced to cut rates once more in August in order to avert a further slowdown in demand.
Labor demand in Australia has been surprisingly robust despite global trade tensions that have put its export-led economy in danger, but today’s news suggests that the jobs engine may be finally sputtering as the escalating tensions between the US and China are starting to take their toll on business investment and confidence.
The Aussie slipped towards the .6900 barrier as the night wore on, but could hold at that level as that has been strong support for several weeks. The key driver, for now, will be the direction of US yields which continue to wallow near the lows of 2.10%. Any further decline in US rates could help the antipodeans, but if bond yields start a counter-trend rally the Aussie may be one of the biggest victims of rate differentials with the pair likely testing the .6500 figure as the month proceeds.
On the more immediate front, the US eco calendar is quiet today with only jobless claims on the docket and the market action looks to be subdued as well as all eyes are on tomorrow’s US Retail Sales data with both bulls and bears hoping that the release will support their thesis on the trajectory of the US economy in Q2 of this year.
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