Australian employment report, Trump reignites trade war

6:00 AM 16 May 2019

Summary:

  • Australian labour market report offers mixed results
  • Market-based likelihood of a rate cut there has risen in the aftermath
  • Stocks improved yesterday after a Trump’s decision to delay auto tariffs, however, a declaration of a national emergency to address threats against American technology has already spoiled upbeat moods

RBA under pressure

Start investing today or test a free demo

Open real account TRY DEMO Download mobile app Download mobile app

The Australian central bank has come under pressure of late after the Reserve Bank of New Zealand decided to trim interest rates. Taking into account the most recent meeting of the RBA one may arrive at a conclusion that each piece of data, especially from the labour market, could be important for market watchers to assess if a rate cut is needed in the nearest future. Hence, today’s employment report has added to uncertainty regarding Australian monetary policy.

The Australian labour force participation rate reached its all-time high in April (seen previously in 2010). Source: Bloomberg

The release showed that the Australian economy added as many as 28.4k new jobs last month, well above the expected number of 15k and close to the previously revised number of 27.7k. Nevertheless, the quality of this increase does not seem to very well as the rise came solely from part-time employees rising 34.7k, at the same time, a number of full-time employees declined 6.3k. However, the underlying trend of employment remained steady in April at 5.1% in annual terms. On top of that, the unemployment rate rose to 5.2% from 5.1% a month earlier, the second increase in a row. Albeit, this uptick was offset by an increase in the participation rate climbing to 65.8% and reaching its highest level since November 2010 (the all-time high). Although today’s report should not be a game-changer for the Reserve Bank of Australia, it may hope a grain of uncertainty among the bank’s members. They are expected to scrutinize incoming labour market reports, hence their impact on both the Aussie dollar and the Australian stock/bond markets could be even higher. After the release the market-based probability of a rate cut in June has jumped to above 50% from below 40%. The market is almost certain the RBA will slash rates by the year-end (more than 90% odds for such a scenario).

The Australian dollar has not responded to a large extent to the labour report. Either way, it is trading roughly 0.2% lower against the US dollar this morning. Technically the AUDUSD has approached the important technical support in the form of the lower end of the bearish channel. If this support is broken down, bears may aim to head toward the post-flash crash low. Source: xSstation5

Stock markets improve and decline again

The US stock market finished higher on Wednesday fuelled by a Trump’s decision to delay tariffs on EU cars. The decision also helped recover German equities especially carmakers with the DAX ending yesterday’s trading 0.9% up. In Asia positive moods have also been shared, however, the gains have been limited so far. While the news regarding delaying tariffs on EU cars was undoubtedly positive benefiting stock markets globally, a declaration of a national emergency (made by Donald Trump) over threats against American technology has already reignited a US-China dispute. After the order, the US Department of Commerce announced the addition of Huawei and its affiliates to the Bureau of Industry and Security Entity List, as CNBC reported. In practice, the Chinese company could find it hard to conduct business with US companies. This move has been read by market participants as a warning sign that Donald Trump does not want to terminate the trade battle with Beijing any time soon. That is why US and European futures are trading lower this morning.

The US500 is hovering above its crucial demand zone, 0.3% down. The next notable support could be found nearby 2715 points. Source: xStation5

In the other news:

  • Japanese PPI for April rose 1.2% YoY, down from 1.3% YoY and above the expected 1.1% YoY increase

  • Australian inflation expectations for May decreased to 3.3% from 3.9%

Share:
Back
Xtb logo

Join over 935 000 XTB Group Clients from around the world

The financial instruments we offer, especially CFDs, can be highly risky. Fractional Shares (FS) is an acquired from XTB fiduciary right to fractional parts of stocks and ETFs. FS are not a separate financial instrument. The limited corporate rights are associated with FS.
This page was not created for investors residing in Brazil. This brokerage is not authorized by the Comissão de Valores Mobiliários (CVM) or the Brazilian Central Bank (BCB). The content of this page should not be characterized as an investment offer in Brazil or for investors residing in that country.
Losses can exceed deposits

We use cookies

By clicking “Accept All”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

This group contains cookies that are necessary for our websites to work. They take part in functionalities like language preferences, traffic distribution or keeping user session. They cannot be disabled.

Cookie name
Description
SERVERID
userBranchSymbol cc 2 March 2024
test_cookie cc 25 January 2024
adobe_unique_id cc 1 March 2025
__hssc cc 8 September 2022
SESSID cc 2 March 2024
__cf_bm cc 8 September 2022
intercom-id-iojaybix cc 26 November 2024
intercom-session-iojaybix cc 8 March 2024

We use tools that let us analyze the usage of our page. Such data lets us improve the user experience of our web service.

Cookie name
Description
_gid cc 9 September 2022
_gat_UA-98728395-1 cc 8 September 2022
_gat_UA-121192761-1 cc 8 September 2022
_gcl_au cc 30 May 2024
_ga_CBPL72L2EC cc 1 March 2026
_ga cc 1 March 2026
__hstc cc 7 March 2023
__hssrc

This group of cookies is used to show you ads of topics that you are interested in. It also lets us monitor our marketing activities, it helps to measure the performance of our ads.

Cookie name
Description
MUID cc 26 March 2025
_omappvp cc 11 February 2035
_omappvs cc 1 March 2024
_uetsid cc 2 March 2024
_uetvid cc 26 March 2025
_fbp cc 30 May 2024
fr cc 7 December 2022
_ttp cc 26 March 2025
_tt_enable_cookie cc 26 March 2025
_ttp cc 26 March 2025
hubspotutk cc 7 March 2023

Cookies from this group store your preferences you gave while using the site, so that they will already be here when you visit the page after some time.

Cookie name
Description

This page uses cookies. Cookies are files stored in your browser and are used by most websites to help personalise your web experience. For more information see our Privacy Policy You can manage cookies by clicking "Settings". If you agree to our use of cookies, click "Accept all".

Change region and language
Country of residence
Language