The Australian Dollar clung on to short term supports through trade on Wednesday bouncing back through 0.7140 despite a downturn in market sentiment driven by equities and US yields. The AUD largely resisted the broader souring of risk appetite, ignoring the sell of in commodities and equity market uncertainty to bounce off intraday lows at0.7118 and push back toward key technical supports at 0.7142. With little domestic data on hand to drive direction the AUD was largely at the mercy of wider global trends and equity flows as investors appeared content to sit back and restore recent ranges ahead of today’s employment report.
Labour Market data for December is due this morning with analyst estimating a modest rise in total employment with 18,000 new roles created, while revisions to November data sets are expected to show true job creation numbers jumped to 37,000, bolstering the pace of jobs growth through H2 2018 to 2.9%. We anticipate labour market performance to remain strong through the short term but note the distinct lack of a flow on into wage and price pressures and until we see an uptick in these key underlying indicators there is very little incentive for the RBA to move away from its current policy setting; in fact, persistent softness coupled with a downturn in GDP could amplify calls for a rate cut and weigh on the AUD through H1 this year.