Summary:

  • Australian jobs report proves better than expected, however a structure of employment growth is less encouraging
  • Chinese GDP beats the forecast, other reports solid as well
  • NZD tumbles over 1% on political turmoil as NZ First Party leader Peters announces his decision after the election

The Asian session abounded in many crucial macroeconomic releases which turned out largely upbeat for the Australian dollar. Let’s begin with the Australian domestic data, the labor market report for September. Firstly, the jobless rate declined from 5.6% to 5.5% while the consensus had pointed to lack of change. Moreover, an employment change came in at 19.8k against the forecast at 15k and it seemed to be solid numbers but the devil is in the details as a chunk of employment growth came from part-time employment which increased 13.7k thus full-time employment grew just 6.1k. Finally, the labor force participation rate remained at 65.2% (the prior month was revised down to 65.2% from the initial reading equal 65.3%).

link do file download linkEmployment growth accelerated in September to the highest rate since the beginning of 2008 (an inverted axis). Source: Macrobond, XTB Research

Overall, the backdrop of the Australian labor market seems to be robust at least in terms of employment growth, on the flip side wage growth remains still sub-par which doesn’t encourage the RBA to consider changing interest rates in the foreseeable future.

Moving on, the AUD got a boost from a set of the Chinese data which was quite firm as GDP growth met the forecast and showed 6.8% yoy (0.1percentage point below the prior month release). Furthermore, retail sales in September came in at 10.3% yoy whereas the consensus had anticipated 10.2% yoy, in turn industrial output showed a 6.6% yoy pick-up against the street’s call at 6.5% yoy. The sole disillusion came from fixed assets investment (excluding rural) which slowed down from 7.8% yoy to 7.5% yoy falling short of the estimate at 7.7% yoy. It could suggest that the Chinese authorities are uninterruptedly trying to rein in undue credit growth

link do file download linkDespite the solid data from Australia and China the AUD remains little changed. The pair is still hanging around its local resistance at 0.7870. Once this level is defended, a move to the downside could be on the cards. Source: xStation5

Regardless of significance of a bunch of macroeconomic reports from Australia and China market’s focus turned elsewhere in the morning. The NZ dollar is by far the top mover in the G10 basket losing as much as 1.2% against the US dollar after NZ First leader Peters decided to back up Labour in order to forge the new government in the aftermath of the last month’s election. As a result, New Zealand has to brace itself for a coalition created by Labour, Green and NZ First which will rule the country with Jacinda Ardern (the Labour leader) taking the helm as the new PM. Thus, National Party, which ruled the country till the election last month, had to concede defeat even as it managed to gather the most of votes.

link do file download linkThe NZDUSD is tumbling after the political reshuffle as a left-wing coalition will be ruling the country with the new PM Jacinda Ardern being at the forefront of the new government. The pair has already approached a relevant short-term support and if it’s broken the pair could open up space for further losses. Source: xStation5