The Aussie Dollar was hit hard on Wednesday, tumbling from a local high of 0.7630 all the way down to 0.7575; its weakest point since early July. If you were awake last night between 2-2.30am you’d have seen the pair very briefly back on a US 76 cents ‘big figure’ but it opens in London this morning around 0.7690.
GBP/AUD traded at 1.7336 and 1.7374 immediately after the Australian employment numbers were released and opens today around 1.7357. The volatility around the data was caused by apparently conflicting headlines. Consensus had looked for an increase in employment around +18k in October but the outturn was a much softer 3.7k rise. Full-time jobs rose 24,300 whilst part-time jobs fell 20,700.
But, even with softer employment numbers, the unemployment rate fell a tenth from 5.5% to 5.4%; helped in part by a small drop in the participation rate to 65.1%. Just as we’ve seen elsewhere in the world – and most notably in the US and UK – falling unemployment in Australia is not leading to higher wages. Australians have largely been shielded from the declines in real wages suffered in the UK and with no cheap immigrant labour, total pay is extremely high by international standards.
But, with no growth in real earnings and a huge burden of mortgage debt to be serviced, worries about slower household consumption should continue to weigh on the AUD from here. The days of an 80 cent AUD/USD rate are not coming back.