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Aussie Employment Report

The Australian Employment Report posted a strong gain for March, as the currency moves higher and growth continues despite some softer numbers this week (Trade Deficit, Loans, Lending.) The AUD/USD just made new highs since the AUD was floated. The details were released as follows:

Aussie Breaking Trendline/Testing 50.0%

The AUD/$ broke through bullish trendline support earlier following a poor February trade balance reading. About an hour ago the pair tested the 50.0% line (on the move from March 29th lows to April 4th high) after the RBA kept their cash rate unchanged at 4.75%, but could not penetrate the 1.03094 level. If we see a close below this level: our next (downside) target is 1.02842 where both the 61.8% and 200 hour moving average converge. It seems that we won’t see movement with any conviction until London comes in…


Aussie Trade Balance

The Australian February Trade Balance reading fell below expectations, coming in at deficit -205M, lower than the estimate of +1200M and the prior reading of +1875M. This result was no doubt negatively impacted by flooding in Australia in January and the New Zealand earthquake in February.  The Aussie moved lower on this release; in addition we have seen risk offered against the USD early in Asia as Bernanake noted that the Fed would will act if the inflation increase is more than ‘transitory.’

AIG Performance of Service Index

The March AIG Performance of Services Index was softer than the prior month at 46.5 vs. 48.7, no doubt affected by the tragedy in Japan. We will look for this indicator to improve next month and the RBA to stay at 4.75% as the Cash Target tomorrow.

RBA’s Financial Stability Review

The RBA had the following comments for their bi-annual Financial Stability Review, the market has had no reaction to this review:

RBA Meeting Minutes

The RBA Meeting Minutes were released sending the Aussie lower as the RBA commented that they saw rates as appropriate. Additionally the RBA had the following comments:

Aussie Employment Report

The Australian Employment Report came in worse than expected, losing 10K jobs while the expectation was a gain of 20K. The unemployment rate was unchanged as expected at 5%, while the drag on the jobs number was led by a loss of 57K part-time jobs. Although the initial headline of a loss of 10K jobs moved the AUD/USD pair ~40pips lower, the pair quickly recovered to post gains as the part-time losses are the story and an insignificant one according to the market participants.

RBA leaves rates unchanged at 4.75%

  • Mildly restrictive policy is appropriate.
  • Inflation in the year ahead to be consistent with target.
  • High AUD is damping inflation.
  • Sees a fall back in farm prices later in the year.
  • Sees further growth in employment.
  • Employment is likely growing at a slower pace.
  • Sees wages growing at rates seen prior to downturn.
  • Asset values are little changed over recent months.
  • Overall credit growth remains quite subdued.
  • Runup in household leverage abated.
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