Australian dollar stung as jobs blow slashes chance of rate rise
TLT•The Australian dollar fell 0.4% after employment dropped by 39,300 in September, while markets cut the chance of a November rate hike to around 9% from 32%.
1. Jobs decline sharply
Australian employment fell by 39,300 in September, the largest drop since early last year, against analysts’ expectations for a 20,000 increase. The unemployment rate held at 4.7%, a five-year high, after August’s figure was revised up from 4.6%.
2. Rate hike bets retreat
The Australian dollar slid 0.4% to $0.6945. Markets cut the chance of a November rate hike to around 9% from 32% before the data, and the chance of a December move to 28% from 56%. The Reserve Bank of Australia has raised rates by 100 basis points this year to 4.6%.
3. Bonds rally
Australian three-year bond futures rose 11 basis points, leaving cash yields 2 basis points below Treasuries. Capital Economics economist Abhijit Surya said the deterioration in labor conditions should give the RBA greater confidence that policy is restrictive enough.
