AUD: Jobs weaker in detail than in headline – UBS

By FXStreet UBS analyst team believes than below the rosy surface, the Australian employment report was less rosy. However, chances of a May rate cut by the RBA have been lowered. UBS is still bearish on the AUD at current levels.

Key Quotes

“On the surface the Australian employment report looks rosy. The unemployment rate in March fell unexpectedly to 5.7% from 5.8% in February, its lowest level since September 2013. The participation rate remained unchanged at 64.9%.However, the details of the report paint a less rosy picture”.

“A collapse in hours worked and a decline in full-time employment highlight two important elements we have been looking out for. One is overall wage growth, which is likely to remain weak; the other is the impact of lower wage growth on broader consumption, particularly its contribution to GDP. This data adds to our conviction of a weaker contribution in the quarters ahead. We see this partially being reflected through consumer confidence, which turned down in April. Still, we admit that the labor market is less negative, and the recent jump in business confidence is consistent with this. The AUDUSD response to the data was muted, bouncing around 0.762-0.766.”

“RBA now less likely to cut in May. …read more

Source:: FX Street