The surprisingly strong Australian jobs report in March led many to anticipate a mean-reverting softer number in April, but it was not to be.
On the headline, Australia added 15.5k jobs in the month, well above consensus of -5.0k, and the unemployment rate dipped to 4.9 percent, the lowest in a year. But drilling down into the numbers shows a less-convincing picture. All the jobs added were in the part-time category (in fact 10.5k full-time jobs were lost in the month) while the fall in the unemployment rate is accounted for by a drop in the labour force as the participation rate dipped to 65.2 percent from a downwardly-revised 65.3 percent. Nevertheless, the knee jerk market reaction was to embrace the headline with the AUD rising across the board – 50 points versus the USD, 40 points versus the NZD and 50 points versus the JPY while 3-month bank bills fell 8bp. Once higher levels were met it was consolidation for the rest of the morning until the China trade data (see below). The question still remains, is yesterday’s 1.0020 low close enough to parity to satisfy the market’s near-term target. Stay tuned.
Earlier data from New Zealand had painted a different picture with house prices falling 0.3 percent m/m in April, house sales slowing to +13.8 percent y/y from +25.3 percent and the April business PMI tumbling to 48.0 from a downwardly-revised 53.8 in March. This marked the first move below the 50 contraction/expansion threshold since November last year. NZD was remarkably resilient in the wake of the weak data and was dragged along on the AUD’s shirt tails after the Oz data.
We also heard the China trade data for April which showed a reversion back to rising trade balances with the surplus increasing to $18.42 bln from $5.35 bln in March and beating market consensus of $9.9 bln. However, the improvement came as a result of much lower imports, just 0.3 percent y/y growth, which is generally viewed as negative for the Australian economy. Export growth was a slower 4.9% y/y from 8.9 percent previously. As you would expect, AUD’s kneejerk reaction was lower, falling back through the 1.01 level versus the US dollar.
Elsewhere, Japan’s bank lending slowed in April with outstanding loans rising by 0.3 percent y/y from +0.8 percent in March while the current account balance for March beat forecasts for the second month in a row, registering a larger surplus of ¥1589.40 bln from ¥1177.8 bln in February. The improvement came on the back of Japan’s income surplus which rose to ¥1800 bln from ¥1636 bln a year earlier. USDJPY was steady in a 65-75 range for the session.
The overnight session was a lesson in Greece headline watching (not done that for a few months!) with the EUR trading with a softer bias (path of least resistance) as Greek coalition talks make no progress. We came off the lows when it emerged that EFSF had sanctioned disbursement of €4.2 bln of today’s aid tranche (€5.2 bln original) which apparently covers bond redemptions and interest payments over the coming month.
Data Highlights
US MBA Mortgage Applications out at +1.7% vs. 0.1% prior
US Mar. Wholesale Inventories out at +0.3% vs. +0.6% expected and +0.9% prior
NZ Apr. REINZ House Price Index out at -0.3% m/m vs. +1.9% prior
NZ Apr. REINZ House Sales out at +13.8% y/y vs. 25.3% prior
NZ Apr. Business PMI out at 48.0 vs. revised 53.8 prior
JP Apr. Bank Lending out at +0.3% y/y vs. +0.8% prior
JP Mar. Current Account Balance out at +¥1589.4 bln vs. +¥1431.1 bln expected and ¥1177.8 bln prior
JP Mar. Trade Balance (BOP basis) out at +¥4.2 bln vs. -¥42.8 bln expected and ¥102.1 bln prior
AU Apr. Employment Change out at +15.5k vs. -5.0k expected and revised +37.6k prior
AU Apr. Unemployment Rate out at 4.9% vs. 5.3% expected and 5.2% prior
AU Apr. Participation Rate out at 65.2% vs. 65.4% expected and revised 65.3% prior
China Apr. Trade Balance out at +$18.42 bln vs. $9.9 bln expected and $5.35 bln prior
China Apr. Exports out at +4.9% y/y vs. 8.5% expected and 8.9% prior
China Apr. Imports out at +0.3% y/y vs. 10.9% expected and 5.3% prior
Upcoming Economic Calendar Highlights
(All Times GMT)
JP Economy Watchers Surveys (0500)
Sweden Industrial Production (0730)
Sweden CPI (0730)
Norway CPI (0800)
UK Industrial Production (0830)
UK BOE Rate Announcement (1100)
Norway Norges Bank Rate Announcement (1200)
CA New House Price Index (1230)
CA Int’l Merchandise Trade (1230)
US Import Price Index (1230)
US Trade Balance (1230)
US Initial Jobless Claims (1230)
US Fed’s Bernanke to speak (1330)
US Bloomberg Consumer Comfort Index (1345)
UK NIESR GDP Estimate (1400)
Andrew Robinson,
SAXO BANK