Slide in Full-Time Employment Keeps AUD/USD Exchange Rate Tight
The Australian Dollar to US Dollar (AUD/USD) exchange rate has been close on 15th February, following the news that employment has continued to grow unimpeded.
Australian jobs data for January has shown a 16k increase in the number of persons in employment, which is the 16th month in a row of increased employed persons.
The national unemployment rate also fell in January, from a revised-up 5.6% in December to 5.5% during the previous month.
Not all of the jobs data was overwhelmingly positive, however; part-time employment rose sharply while persons in full-time employment fell by -49.8k.
AUD/USD Exchange Rate Advances Limited by Frozen Interest Rate Forecasts
While the AUD/USD exchange rate has risen recently, this comes despite forecasts that the Reserve Bank of Australia (RBA) will not immediately react to the AU jobs data.
Looking at the Australian central bank’s possible reactions based in the employment stats, CommSec Chief Economist Craig James said;
‘Overall, the job market is clearly in great shape. Jobs are being created, more people are looking for work and businesses are still keen to hire.
The RBA believes “full employment” is near 5%. So there is still ample spare capacity.
We agree with the Reserve Bank that increases in the pace of wage and price growth will be gradual.
Interest rate settings are solidly on hold. Today’s data cements that view’.
USD/AUD Pairing Trades Narrowly as Experts Analyse US Inflation and Sales Stats
The US Dollar has remained close to the Australian Dollar today, following the release of contrasting US inflation and retail sales data this week.
The US inflation rate was reported at 2.1% on the year in January, while core inflation has remained a few steps behind at 1.8% on the year.
Both readings have raised hopes that the Federal Reserve could raise US interest rates in the near-term, given that inflation may ultimately have to be lowered by the Fed.
Tapping into this assumption, Michael Feroli of JPMorgan Chase & Co has stated;
‘To the extent markets had been dismissing the idea that inflation could firm, that was a mistake. Now markets are repricing to reflect that inflation risk.
I definitely expect the numbers to continue to push up’.
Despite this burst of optimism from USD traders, the US Dollar hasn’t been entirely supported by the latest retail sales stats; a -0.3% drop was reported in January.
Australian Dollar to US Dollar Exchange Rate Turbulence ahead on RBA Meeting Minutes
The Australian Dollar may face volatility when the next Reserve Bank of Australia (RBA) meeting minutes come out on 20th February.
The RBA left interest rates unchanged on 6th February; if the minutes point to the bank leaving rates untouched in the future, the Australian Dollar could slide in value.
On the other side of the pairing, the US Dollar could slide in value sooner when the University of Michigan consumer confidence score is announced on 17th February.
The University’s initial estimate is for a slight reduction in the February confidence reading, which could trigger a USD/AUD exchange rate decline.