Employment change not quite so impressive
Australia’s unemployment rate fell to 4.9% in February, the lowest since May 2011, data released this morning showed. Granted, this was coupled with a dip in the participation rate to 65.6% from 65.7%, but nevertheless investors looked favourably on the numbers. The number of jobs added in the economy was not so robust, with a net plus-4,600 jobs, though all of the gains were in the part-time category, with a loss of 7,300 full-time jobs.
The markets focused on the better unemployment number and bought the Aussie up to a three-week high versus the US dollar. The greenback had been under pressure all week in the run-up to last night’s FOMC meeting, and that pressure intensified in the aftermath. AUD/USD is now at 0.7155 and has tested 100-day moving average resistance at 0.7162 but looks set to close above the 55-day moving average for the first time since February 26. Australian shares didn’t echo the boost in risk appetite, with the Australia200 index falling 0.34%.
AUD/USD Daily Chart
Trump says tariffs will remain
Yesterday US President Trump stated that the US-China trade negotiations were “coming along nicely” and confirmed that US negotiators would be traveling to Beijing this weekend. However, he also stated that it is likely that the tariffs on Chinese goods would remain in place for “a long period of time” to ensure that China adheres to any terms and conditions in any new trade deal. I’m not sure how Beijing would react to that state of affairs with its seemingly one-sided approach. Let’s see what kind of reception the negotiators get in Beijing next week.
Asymmetric trade deal sinks Fed rally
Bank of England unlikely to excite
Unlike its US counterpart, today’s Bank of England meeting is unlikely to stir much activity in the markets. With the Brexit issue nearing, and still not resolved, the Bank has said it would wait to see how the economy reacts or evolves after Brexit. What would they do if Brexit was delayed for a longer period? Money markets are still erring on the hawkish side, though the chances of a hike by year-end are only at 34%.
What next for the BoE?
The rest of the calendar is populated by UK retail, consumer and producer prices for February together with retail sales for the same month. The US session sees only the Philadelphia Fed manufacturing survey on tap.
The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/