Australian dollar goes wild on US wages boom

DXY rebounded over the weekend but not that much as CNY takes off on trade hopes. EUR fell:

AUD was wild, launching then crashing:

Market positioning remain very short at -70k contracts though this data only suns to Wednesdays so does not include the recent short squeeze:

Gold held up:

Oil didn’t:

Base metals were solid:

Big miners eased:

EM stocks flamed out:

Junk was solid:

Treasuries were belted:

Bunds bought:

Stocks were mixed:

US jobs are still on a tear:

Total nonfarm payroll employment rose by 250,000 in October, and the unemployment rate was unchanged at 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in manufacturing, in construction, and in transportation and warehousing.

Hurricane Michael made landfall in the Florida Panhandle on October 10, 2018, during the reference periods for both the establishment and household surveys. Hurricane Michael had no discernible effect on the national employment and unemployment estimates for October, and response rates for the two surveys were within normal ranges.

… The change in total nonfarm payroll employment for September was revised down from +134,000 to +118,000, and the change for August was revised up from +270,000 to +286,000. The downward revision in September offset the upward revision in August.

…In October, average hourly earnings for all employees on private nonfarm payrolls rose by 5 cents to $27.30. Over the year, average hourly earnings have increased by 83 cents, or 3.1 percent.

Year on year is good:

Unemployment was stable at 3.7%:

Analytic series firm:

Still shadow slack:

Wages jumped to 3.1%:

So, some payback finally for US workers from a tight labour market that has plugged its immigration leaks. Still, I don’t think wages are about run wild. The monthly gains show that much of the jump was the base effect as a weak October ’17 month dropped out:

The next three months to drop out ran at an annualised rate of 4.1% so wages will fall back again if the October rate is repeated.

It’ll keep the Fed interested but is not panic stations. Looks like more Goldilocks to me.

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the fouding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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