Talking Points:
- Australian dollar gained more than 1.1 percent versus the US dollar
- Unemployment rate 6.0 percent in May versus 6.2 percent expected
- Australia gained 42,000 jobs in May versus 15,000 expected
The Australian dollar climbed as much as 1.1 percent versus its US counterpart after May’s employment data topped estimates. Economists were expecting the country to add 15K jobs in the month of May; actual figures topped estimates at 42K jobs added. Most of the jobs gained came from the part-time figures (+27.3K). Australia added 14.7K full-time jobs in May. In addition, the unemployment rate decreased to 6.0 percent from 6.2 percent in April, marking its lowest level in one year. The participation rate remained unchanged at 64.7 percent.
Last week, the Reserve Bank of Australia maintained a neutral monetary policy stance that is dependent on incoming economic data. While April’s figures were revised lower overall, today’s upbeat employment report did not seem to encourage speculation on a near term RBA rate cut. Indeed, Australian front-end government bond yields moved sharply higher in the aftermath of today’s release, suggesting the move higher in the Aussie was driven by an improving RBA policy outlook.
