Will the jobs report finally break the Australian dollar

See the latest Australian dollar analysis here:

Macro Afternoon

DXY has blasted off:

Once again, the Australian dollar sits on the cliff edge:

EMs were stronger:

Gold runs on:

Oil popped:

Metals meh:

And miners:

Plus EM stocks:

Junk is still fine:

Bonds were soft:

Stocks, or should I say Nasdaq, to the moon:

Westpac has the wrap:

Event Wrap

The FOMC minutes just released offered little new, reiterating that the current policy stance should “remain appropriate for a time”. Some trade uncertainties had diminished recently, and there were signs global growth was stabilizing. However, they also noted risks which could slow the current expansion, including the coronavirus outbreak and Middle East tensions. Liquidity operations to support the short-term money markets were seen as becoming less necessary.

US housing starts fell 3.6% in January, not as weak as the 11.2% fall expected, and December was revised higher. Building permits rose 9.2%, beating the +2.1% estimate. A mild winter has added to the well-known fundamental supports of low mortgage rates and a strong labour market. PPI inflation rose 0.5% in January (vs 0.1% expected), the core measure up 0.5% (vs 0.2% expected). These take the annual paces to 2.1% and 1.7%. Strength was concentrated in the services sector.

Fed speakers included Bostic, who reiterated the mantra that policy is in a “good place”; Mester, who said US trade deals should help ease uncertainty; and Kaplan, who said a fall in growth in Q1 and rebound in Q2 and Q3 are expected, but it’s too soon to make that judgement with confidence.

Event Outlook

Australia’s January employment data is expected to show an increase of 15k, in line with the lead from recent business surveys. The market anticipates 10k jobs will be created. We look for the unemployment rate to rise to 5.2% from 5.1% despite this job gain as participation edges higher.

NZ Q4 PPI is due, but attracts little attention given Q4 CPI is already known.

For the Euro Area, February consumer confidence will be released. And in the UK, January retail sales are due.

Over in the US, the February Philadelphia Fed Index will follow. And the Federal Reserve’s Barkin, Kaplan, Brainard, Bostic, Clarida and Mester will speak.

Not even threatend withdrawal of liquidity can stop the US stock freight train now. It is out of control come what may:

Normally the Australian dollar would be wildly bid during such a euphoric period. That it is not is further evidence that something is not right with the boom.

Indeed, today, we get another chance for the AUD to finally break

All data has been pointing at rising joblessness for a year. ANZ:

SEEK job ads:

NAB business survery:

The PMIs, Roy Morgan etc, falling wages growth, I could go on, are all pointing to labour market weakening.

Yet we’ve barely seen it in offical data. Will it appear today? Employment reports are a craps shoot, especially ABS numberwang versions, so I have no idea.

All I can say is, we’re due!

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)

Comments

  1. In the modern job market, with gig jobs (Uber etc) so available irrespective of actual real demand for labour, I struggle to see how “unemployment” (meaning you couldn’t even do one hour in a week) can meaningfully rise. Surely anyone desperate can do a bit of Uber, even if it’s woefully inadequate.

    Only thing to watch is the shift from full time to part time jobs.

    • 1
      Reckon what’s happening is, full-time jobs that are gone used to contribute immediately to unemployment figures. Now, these jobs that are gone, contribute to a part-time stat because you can always pick up at least 1 hour of uber driving etc. So the part-time stats is where the unemployment figures are “hiding”… That’s the “underemployment” they talk off, it’s just plain unemployment dressed up with bedpan jobs. Meanwhile people still staring at the headline full-time jobs stats and calling it just another sunny day.

      • I only know what the article says from Westpac, ie

        “ Australia’s January employment data is expected to show an increase of 15k, in line with the lead from recent business surveys. The market anticipates 10k jobs will be created. We look for the unemployment rate to rise to 5.2% from 5.1% despite this job gain as participation edges higher.”

    • boomengineeringMEMBER

      Gav, just thinking about your situation and wondered if you changed vocation to mechanic you may hate it and dispose of your collection. Not unusual for office workers to tinker with manual skills but extremely unusual for manual workers to have office duties as a hobby. Although most mechanics love their job and even tinker in their spare time.

    • JPY isn’t as much of a safe haven anymore?
      I read somewhere it was Germany and Japan that are on the edge a serious recession.

        • Let’s keep an eye on it, see how moves start correlating.
          Think Japan won’t be such a safe haven this time around.

        • Germany went ALL IN on auto-manufacturing and export to China almost 15 years ago and boomed ever since. Like Australia and mining / housing they sacrificed the rest of their manufacturing on the alter of a guaranteed sure thing in China growing forever.

          Last year China put a moratorium on ICE cars and is basically ending their import altogether – HENCE Elon Musk and his factory in Shanghai – only way to get around the import bans was to make EV cars in China.

          Germany has 400,000 auto-manufacturing jobs about to go. The ultra-far right was at almost zero percent 5 years ago and is now on the verge of controlling power with Merkel and is calling for a Dexit.

          Yeah – things change that fast in 12 months.