Australian dollar steadies as markets await jobs data for steer on rates
TLT•The Australian dollar edged up to $0.6987 as markets assessed whether Thursday’s jobs report could influence the Reserve Bank of Australia’s rate outlook. Markets priced in about a 30% chance of a November hike to 4.85%, while forecasts called for 20,000 new jobs and an unemployment rate unchanged at 4.6%.
1. Currencies edge higher
The Australian dollar rose to $0.6987 on Wednesday after gaining almost 0.4% overnight, while the New Zealand dollar stood at $0.5615 after a 0.5% rise. Both currencies remained near major support levels as the U.S. dollar’s rally paused.
2. RBA outlook in focus
Minutes from the Reserve Bank of Australia’s last meeting sounded more hawkish than Governor Michele Bullock’s post-decision comments. The RBA raised its rate by a quarter point to 4.6%; board members highlighted the risk that the Australian dollar could weaken if overseas central banks raised rates while the RBA held steady. Nomura economist Andrew Ticehurst said the minutes led the firm to raise its estimate of the chance of a November hike to 40% from 30%, while markets priced in about a 30% chance of a move to 4.85% in November and 50% in December.
3. Jobs report due Thursday
Forecasts call for 20,000 jobs to be added in September, following a gain of 39,500 in August, and for unemployment to hold at 4.6%. A further increase, such as to 4.7%, would strengthen the case against a November rate rise, while a subsequent fall in unemployment could pressure the Australian dollar.
