A fortnight ago, the Australian Dollar stood on the sidelines as the rest of the non-US currency world partied, but this last week it’s been out there on the dance floor, hitting 80 US cents for the first time since September and falling just 20 pips short of what would have been its best level in 32 months. World commodity prices have certainly help lift the AUD, as too has the very low level of volatility across asset classes which makes the currency’s yield advantage more attractive. In the one-month period to the middle of the week, gold had risen almost $100 per ounce to $1,242 per ounce; an increase of almost 9%. Over the same period, aluminium was up 13% and platinum was 12% higher. Coal has been steady recently but was still up more than 30% from last Summer. The big event of the week locally was the December labour market report. According to the Australian Bureau of Statistics (ABS), employment rose by a seasonally adjusted 34,700, beating consensus expectations of a 15,000 increase. Employment has now increased in each of the past 15 months, which equals the longest consecutive streak on record. One more positive month in January, would be the longest uninterrupted period of jobs growth since the survey began in 1978. Full-time employment increased 15,100 to 8,518,900 in December and part-time employment increased 19,500 to 3,921,800. The ABS noted that, "Full-time employment has now increased by around 322,000 persons since December 2016, and makes up the majority of the 393,000 net increase in employment over the period," It was the fastest growth over a calendar year on record, and the second fastest over any 12-month period, only beaten by a 409,300 increase in August 2005. The only note of caution was news that the unemployment rate rose to 5.5% from 5.4%. This was due to much stronger labour-force participation which might indicate some further spare capacity in the labour market and therefore a lack of wage pressure. But, unlike the UK or US, Australia doesn’t release earnings numbers with the employment report. We’ll still have to wait for that and with the
Australia Day holiday coming up on Friday, there might not be too much activity locally in the week ahead. The Australian Dollar ended the week at USD0.7985, with AUD/NZD at 1.0975 and GBP/AUD1.7345.