Aussie Bounces Sharply After Unemployment Drops Unexpectedly

The Australian dollar climbed after the release of Australia’s employment data that showed an unexpected drop of the unemployment rate. The currency erased yesterday’s losses against most-traded rivals and managed to erase losses for the whole week versus the US dollar.
The Australian Bureau of Statistics reported that employers added 14,700 jobs in September on a seasonally adjusted basis. That is compared to the forecast increase of 15,300 and the previous month’s positively revised gain of 37,900. The increase was the result of growth in full-time employment by 26,200, while part-time employment fell by 11,400. But what really caught the traders’ attention was a decrease of the unemployment rate from 5.3% to 5.2%, which experts had not predicted. Yet the decrease could be in part explained by the fall of the participation rate from 66.2% to 66.1%.
Analysts speculated that the unexpected drop of unemployment decreased chances for an interest rate cut by the Reserve Bank of Australia next month. Nevertheless, it was not enough to make the central bank drop easing bias, meaning that the cut will likely happen later.
Released separately by National Australia Bank, the business conditions index rose from 0 to +1 in the third quarter of this year. But the business confidence index dropped sharply from +7 to -2. Alan Oster, NAB Group Chief Economist, commented on the results:

There are tentative signs that the trend decline in business conditions since mid-2108 has slowed, but conditions remain below average with only a small increase in Q3. Business confidence saw a sharp fall in Q3 more than reversing the surprising bounce in Q2. It appears that any post-election optimism has faded despite very low interest rates following the back to back interest rate cuts mid-year.

AUD/USD surged from 0.6776 to 0.6825 as of 13:41 GMT today. EUR/AUD dropped from 1.6377 to 1.6298, reaching the low of 1.6260 intraday. AUD/JPY gained from 73.48 to 74.12, and its daily maximum was at 74.40.

If you have any questions, comments, or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

Original from: www.earnforex.com