Aussie Rises on Superb Jobs Report

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Australia records a standard employment report

The Australian dollar extended its gains and pushed above the 72 level. The Aussie received a boost from an excellent employment report for November. The economy created 336.1 thousand new jobs, shattering the consensus of 200 thousand and ending a nasty streak of four straight declines. This marked the highest monthly earnings recorded, although only 128 thousand of these jobs were full-time. The unemployment rate fell sharply to 4.6%, down from 5.2% previously.

The star numbers were the result of the breakdown of the locks in New South Wales and Victoria. Will this change the accommodative attitude of the RBA? This is unlikely, as the employment report did not show any indication of wage growth, which is a key metric for the RBA regarding tax policy. The central bank has stated that it wants to see wage growth around 3% before it plans to further reduce QE and does not see a rate hike until 2022. Markets are more booming, prices at several rates next year.

There was some drama at the FOMC meeting as the Fed took a step toward normalizing policy. As expected, the Fed has announced that from next month it will scale double-digit bond purchases to $ 30 billion / month. This means that bond purchases will end in March rather than July, putting the Fed in a position to raise rates earlier. The point plot showed that 18 FOMC members project at least one tax rate in 2022. This is a major change from the September meeting, when members were equally divided. Also, 12 of the 18 members are expecting three rates next year.

The tax return was significant in that policymakers explained that the sharp rise in the taper was due to inflationary developments and a stronger labor market. This is a clear signal that the Fed has taken off its gloves to fight inflation, which it is reluctant to do. Just a few weeks ago, Fed Chairman Powell insisted that inflation is transitory before abandoning this stance and acknowledging that high inflation would remain longer than previously expected. This will make future inflation reports all the more important now that the Fed has circled inflation as the number one public enemy.

AUD / USD Technique

  • There are support levels at 0.7052 and 0.6933
  • AUD / USD faces resistance at 0.7239. The next resistance line is 0.7307

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