AUD/USD: Australian Job Creation Spurs a Rebound

The Australian dollar was higher against the US dollar on Thursday afternoon. The Aussie has made gains across the board following a report in the early hours that showed above consensus Australian jobs growth during December. The gains might have been limited by a risk-off approach being taken across broader markets in response to the coronavirus outbreak in Wuhan China.

AUD/USD was higher by 27 pips (+0.39%) to 0.6871 with a daily price range of 0.684 to 0.688 as of 1pm GMT, with the currency pair having for now, put an end to the downtrend of the past week.

The Australian dollar

The level of surprise was perhaps especially high in response to the better than expected jobs gains in Australia because of the bushfires. While jobs growth had been forecast, one might have expected a downside risk given the impact the fires could have had on businesses. It is worth noting that this was one of the first top[ tier economic data releases since bushfires became a big problem in December.

The unemployment rate in Australia dropped to 5.1% from 5.2% previously and the economy added 28.9k jobs in December, better than the 15k expected. Part-time employment accounted for all the job gains while full time employment dipped slightly. Markets largely ignored the internals of the data, instead reacting to the strong headline job creation that infers a strong economy during the bushfires.

The US dollar

Weekly labour market data from the US will be the main feature on the economic calendar in the New York session. Continuing jobless claims (January 10) are expected to be 1.746M while initial jobless claims (January 17) are forecast to be 215k, up from 204k the week prior.

The dollar was seeing some demand, although nto against the Aussie as market became more risk averse with growing concerns about the rising death toll in China due to the coronavirus. An official Chinese update on Thursday said there are now nearly 600 cases with 17 deaths. The World Health Organisation (WHO) has not yet called the outbreak a ‘Public health emergency’ but that could change if the situation continues to get worse.

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