Strong full-time jobs

The Australian dollar jumped across the board after July’s employment report came in better than forecast. The Australian economy added a net 41,100 jobs last month, more than the 14,000 economists had expected and almost matching the 42,300 jobs added in May. The details also suggested a robust report, with 34,500 of the jobs coming from the full-time category while 6,700 were from part-timers. The unemployment rate held steady at 5.2%, as expected.

The strong report capped interest rate markets, with the 3-year yield rising one basis point, as possible further RBA easing bets were scaled back. Interest rate markets are now assigning a 22% probability of a rate cut at the September meeting, down from 44% yesterday.

The better-than-expected data saw AUD/USD jump to 0.6789, a 0.6% gain on the day, while AUD/JPY rose to 79.31. AUD/USD is now at 0.6780 and has been trading within the confines of 0.6740 and 0.6810 for the past week with minor trendline support around the 0.6730 level today.

AUD/USD Daily Chart

Source: OANDA fxTrade


Inflation expectations rise

Adding additional upward pressure on Australian rates was the release of August consumer inflation expectations. Expectations rose to 3.5%, up from 3.2% in July and the highest reading in four months. These readings are expectations of future inflation over the next 12 months and the survey is conducted by the Melbourne Institute. The readings appear slightly contrary to the RBA’s own thoughts and may not have such a lasting impact.


US yields at record low

The demand for US Treasuries as a safe-haven asset continues unabated, with the 30-year yield dropping below the 2% for the first time ever in Asian trading. The 30-year yield had closed at 2.03% last night. Reuters noted that, despite US 30-year yields at record lows, they are still higher than elsewhere, with the Japan JGB yield at 0.155% and the German yield at -0.2%.

Yesterday, in a premature release of an interview scheduled for today, former Fed Chair Janet Yellen commented that it was “most likely the US is not entering a recession, but risks have risen”. This when the US yield curve inverted for the first time in 12 years.


Retail sales day

The European data calendar features UK retail sales for July, with estimates suggesting 0.2% contraction following the strong 1.0% increase in June. There are no major data releases scheduled from either Germany of the Euro-zone today.

The US session sees the release of US retail sales for July as well. They are expected to grow 0.3% m/m, a mild slowdown from June’s 0.4% gain. The NY State Empire manufacturing index is expected to dip to 3.0 from 4.3 while the Philadelphia Fed manufacturing survey is seen dropping to 10.0 from 21.8. The rest of the data slate includes industrial production for July, +0.2% from a flat reading the previous month, and capacity utilization, dipping to 77.8 from 77.9%.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD advances above 1.14 after unchanged ECB, mixed US data

EUR/USD is trading above 1.14, higher after the ECB left policy unchanged and called governments to act. US retail sales beat with 7.5% while jobless claims disappointed with 1.3 million. US coronavirus figures are showing further increases in cases.


GBP/USD advances above 1.26 amid mostly upbeat US, UK data

GBP/USD is trading above 1.26, higher. The UK jobs reports showed low unemployment but also depressed wages. US retail sales beat expectations but jobless claims remain high. 


Gold trades with modest losses, downside remains limited

Gold witnessed a modest intraday pullback amid a pickup in the USD demand. The prevalent risk-off mood extended some support to the safe-haven metal. A sustained break below $1800 is needed to confirm a bearish break.

Gold News

Why is the crypto market falling today?

War for dominance impacts the market and heralds several days of turbulence. Fight between Bitcoin and Ethereum hurts the Altcoin segment, which is largely overbought after weeks of euphoria. Ripple is the most affected of the Top 3 and steps back into a high-risk environment.

Read more

WTI: 200-HMA is a tough nut to crack amid rising wedge breakdown

WTI has bounced-off lows, still sheds over 1% to trade around $40.80, as the OPEC and its allies’ (OPEC+) decision to ease output cuts from next month weighs.

Oil News

Forex Majors