Aussie gains as unemployment hits 6-1/2 year low

Unemployment lowest since 2012

While the headline number of jobs Australia added in September was a disappointment, it was the details and the accompanying unemployment data that stirred Aussie bulls. Australia added a mere 5,600 jobs last month, the least in two months, but the breakdown showed that 20,300 full-time jobs were added versus a loss of 14,700 part-time ones. The unemployment rate fell to 5.0%, the lowest since April 2012, though this could be partly explained by a drop in the participation rate to 65.4% from 65.7%.

AUD/USD Daily Chart

Source: Oanda fxTrade

Nevertheless, investors looked at the more positive aspects of the data stream and bid up the Aussie. AUD/USD rose as much as 0.39% to 0.7137 and is currently sitting at 0.7137. The FX pair faces a couple of resistance points at the 55-day moving average at 0.7226 and a downward-sloping trendline from August 21 at 0.7238. Stochastics momentum indicators are giving bullish signals.

USD/CNH straining at the leash

The fact that the US did not label China as a currency manipulator in its latest currency report has been taken as a green light for yuan bears to re-test the limits. USD/CNH is up 0.29% at 6.9335, nearing last week’s high of 6.9435 with ultimately eyes on August’s 19-month high of 6.9593. Once again, a slight bid tone to the US dollar as yields tick higher can be seen as justification for the firmer USD/CNH rate.

Asia market update: a busy session is unfolding

In other China news, China policy adviser and former PBOC member Fan Gang has said China would never sell off its US Treasury holdings to hit back at the US during the trade tariff war. He cautioned that the trade war would advance into the financial realm if China ever considered doing this, and believes it would hurt China more than the US.

Is weak UK CPI the result of soft retail sales?

The highlight on today’s European data calendar will likely be the UK’s retail sales for September. Recall yesterday consumer prices were below forecast during the same month and could imply slow sales. Estimates are for sales to have fallen by 0.4% m/m last month though are seen rising 3.6% on an annualized basis.

German wholesale prices are also scheduled together with Swiss trade numbers. The US calendar has no tier-1 data listed, with only the Philadelphia Fed index and weekly jobless claims slated. Fed’s Bullard and Quarles are due to speak.

You can view the full MarketPulse data calendar at https://www.marketpulse.com/economic-events/

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