Australia’s Employment Data And The Aussie


We will be closely watching tomorrow’s employment figures out of Sydney for an insight into the health of Australia’s labour sector. In December, the big swings occurred in the narrow group of 15-24-year-old females, which explained all of the decline in participation, and 60% of the decline in part-time employment. Given the shift away from traditional store shopping, in which young people have historically been employed, towards online spending, the seasonal factors may have weighed down the employment data. Thus, if we see these factors unwind, we predict we could see total employment rise by around 30,000 and the unemployment rate to remain at 5.2%, modestly higher than the consensus estimate of 10,000 and 5.3%.

If our predictions prove right, we could see the data push the aussie higher. On the other hand, a worse than expected report tomorrow may send AUD/USD lower. However, given the correlated nature of global markets AUD will likely resume moving in line with risk sentiment relatively soon after the data release.

It is clear AUD is highly correlated to risk moves, thus we are closely monitoring the situation in Greece as it will likely continue to dominate investor sentiment. We expect that Greece will secure its second bail-out; however it may not happen as soon the markets want it to, which could cause a fair bit of volatility in the short-term.


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