Strong Australian employment report (18 July)

The Australian employment report delivered jobs growth of +50.9K in June, well above 16.5K expected, and most of the gains were full-time; up 41.2K.

The data will probably not change the outlook for rates much given it comes after slower jobs growth Feb-May, and the unemployment rate was reported unchanged at 5.4%, in a stable range since Sep last year, but at the bottom of the range for a second month, and consistent with ongoing gradual improvement in the labour market.  (it was a bit lower at 5.37%, vs 5.40% in May, a low since 2012).

The participate rate rose from 65.5 to 65.7, reversing falls in the previous three-months, below the peak in January of 65.8, but overall around record highs, seen last in 2010.

Overall a solid outcome, that balances  the recent less strong outcomes since January, and will support the RBA view that the next move in rates is more likely to be a hike, albeit still some time away.

3yr bond yields have risen 4bp on the data and the AUD has risen 0.4% so far on the day, against a relatively stable NZD and other major currencies.

We were stopped out of our long EUR/AUD position.

(Chart 1: The unemployment rate at a low since 2012 in June, the  quarterly under-utilization measures were not updated in June)

(Chart 2: Participation rate recovered some of its recent fall, still broadly around record highs last see in 2010)

(Chart 3: A rebound from recent softness in labour market growth)



Short half unit NZD/CAD at 0.8914; s/l 0.9013; t/p 0.8513

Short half unit NZD/CAD at 0.8914; s/l 0.9013; t/p 0.8513

Position closed on stop

Long half unit of EUR/AUD at 1.5824; s/l 1.5673; t/p 1.7234 ( stop executed at  1.56688, loss was 1.175% of capital)


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Greg Gibbs,
Founder, Analyst and PM
Amplifying Global FX Capital Pty Ltd