Thursday was a far more interesting day for the Australian Dollar than the whole of the previous three days of the week. AUD/USD initially fell after a soft-ish labour market report, surged back on to a US 78 cents ‘big figure’ then tumbled to 0.7720 as the US Dollar caught a huge bid on the back of rising US bond yields. In the terminology of technical analysis, it was a classic “key day reversal” with a higher high, lower low and lower close than the previous day and it will be very interesting to see if this relatively rare indicator again proves correct.
The March labour market report was quite a bit softer than had been expected. Total employment rose by just 4,900 against consensus expectations of a 21,000 increase. More disappointingly, February’s initially-reported 17,500 gain was revised to show a drop of 6,300 which brought to an end what had previously been a run of 17 consecutive monthly increases in employment. The main revisions came in full-time jobs which were now estimated to have gained only 20,100 in February, instead of the initial outsized jump of 64,900. March was even worse with full-time positions falling 19,900. The unemployment rate was steady at 5.5 percent, after a downward revision to February. It has hovered between 5.4 percent and 5.6 percent for 11 months now whilst the participation rate dipped to 65.5 percent, having peaked at 65.7 percent in January as more women entered the labour force.
On the Australian stock exchange, the ASX Metals & Mining index hit a three-month high yesterday, driven by sharply higher prices for industrial metals. Aluminium is up 32% so far this month and nickel is 20% up this week alone on Russian sanctions and supply shortage concerns. Three-month nickel on the London Metal Exchange rallied as much as 9.3% to $16,690 a tonne on Thursday, the highest since December, 2014. Australia’s biggest export commodity, iron ore, meantime, is up 8.5% over the last three days. Whether these metals can sustain these gains in the face of a stronger USD and ahead of the weekend remains to be seen. The Aussie Dollar opens in Asia this morning at USD0.7725, with AUD/NZD at 1.0630 and GBP/AUD1.8235.