Aussie Falls vs. Rivals After Employment Report, Lowe’s Speech

The Australian dollar was weak today, falling against all most-traded rivals, even commodity currencies. Market analysts listed the following reasons for the decline: risk aversion on markets due to concerns that US politicians may fail to agree on a coronavirus relief package ahead of the presidential election, unfavorable Australian employment data, and comments from the Australian central bank’s chief that boosted bets on additional monetary easing.
Philip Lowe, Governor of the Reserve Bank of Australia, was delivering a speech at Citi’s 12th Annual Australia and New Zealand Investment Conference today. Among other things, he discussed potential monetary easing. And while he did not make any specific statements, his comments reinforced the outlook for an interest rate cut in the near future. In fact, the general consensus is that the RBA will cut interest rates at its next meeting in November.
The Australian Bureau of Statistics reported that the number of employed people fell by 29,500 in September on a seasonally adjusted basis following a jump by 129,100 in August. Not a good reading, though not as bad as a 38,000 drop that analysts were predicting. The unemployment rate ticked up from 6.8% to 6.9%, though it was below the market consensus of 7.0%. Experts explained the worsening labor market by the extreme lockdown measures in Victoria.
The Melbourne Institute Inflation Expectations increased to 3.4% this month from 3.1% the month before.
Released yesterday, the Westpac-Melbourne Institute Index of Consumer Sentiment demonstrated a jump of 11.9% in October. Together with the surge of 18.0% registered in September, it has brought the index to the highest level since July 2018. The report said that it was “an extraordinary result”.
AUD/USD dropped from 0.7159 to 0.7084 as of 10:51 GMT today. EUR/AUD climbed from 1.6397 to 1.6537. AUD/NZD fell from 1.0757 to 1.0722, reaching the low of 1.0701 intraday.
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