** AUD/USD **
iNVEZZ.com, Thursday, August 7: The AUD/USD today reached a two month low, falling nearly one percent to $0.9264 as of 07:21 BST, as traders increased bets the Australian central bank would cut interest rates after unemployment soared to its highest level since 2002. Australia’s jobless rate has surpassed that of the US for the first time since 2007.
The Labour Force Commentary for last month, published by the Australian Bureau of Statistics yesterday, stated: “Australia’s unemployment rate increased by 0.3 percentage points (based on unrounded estimates) to 6.4% in July 2014 (seasonally adjusted). The increased unemployment rate resulted from increased participation with the number of persons in the labour force increasing by 43,400 persons, and the number of employed persons decreasing by 300. The net result was the number of unemployed persons increased by 43,700 to 789,000 in July 2014.”
“It’s been a long time since Australia has had that kind of number,” Michael Blythe, Sydney-based chief economist at Commonwealth Bank of Australia, told Bloomberg. “Most other countries have unemployment figures trending down, but our number is edging higher. This is quite a significant divergence from our trend.”
Some market analysts believe that weak jobs data will alter the Australian central bank’s current policy of holding rates stable. The Reserve Bank of Australia has kept its cash rate at a record low of 2.5 percent for a full year.
According to Divya Devesh, FX strategist for Standard Charted Bank in Singapore, the RBA is unlikely to change its policy stance solely on one set of figures, especially since the jobs data has proven to be volatile.
“I don’t expect to see any change in stance from them. I still think they will remain neutral in the coming months,” Devesh commented to Reuters.
Tomorrow will be key for the Aussie, with the RBA monetary policy meeting being the highlight of the day. The RBA’s statement is due at 02:30 BST, the same as the release of the Australian Bureau of Statistics’ monthly home loans report.