Summary:

  • Australian dollar leads the gains in early trading despite quite a disappointing labour market report
  • New Zealand inflation meets expectations making a huge slowdown at the same time though, forget about rate hikes this year
  • Trump and Abe agree to start trade talks following the meeting in Florida

This Asian session was dominated by two crucial macroeconomic readings which could matter for both AUD and NZD going forward. Let us just notice that Wall Street closed Wednesday’s trading little changed, but the SP500 futures are trading a bit higher at the time of writing of this analysis. When the US stock exchange opens it’s worth keeping a closer eye on Amazon following the yesterday’s post-session announcement from Jeff Bezos who informed investors that the number of Prime users outstripped 100 million with estimates ranging from 60 to 100 million. The stock jumped to above $1555 in after hours trading and one may expect upward momentum to continue this afternoon. Backing to currencies let’s begin with the Australian dollar being the best major currency in the morning (up 0.3%).

link do file download linkThe Australian jobs market kept its underlying robust momentum, but the March reading took investors by surprise to the downside. Source: Macrobond, XTB Research

The headline employment change came in just at 4.9k vastly missing the consensus calling for 20k. What’s turned out even worse the last month print was revised down from +17.5k to a 6.3k loss ending a period of sixteen of consecutive months of gains. The breakdown proved to be weakish alike as full-time employment shrank almost 20k and an overall increase was driven solely by part-time jobs which grew all but 25k. Bulls could look for some positives in the unemployment rate as it slid from 5.6% to 5.5% in line with forecasts nevertheless the backdrop is not so rosy as the labour force participation rate fell by the same amount suggesting that lower unemployment was caused by shrinking labour force. Having said that, the underlying trend in the Australian jobs market remains robust and it creates no downward pressure on monetary policy.

link do file download linkThe Aussie is shrugging off the weaker jobs market report for March and it’s bouncing off its crucial support placed at 0.7760. Source: xStation5

Moving on, NZ dollar trades got a blow as well as inflation slowed down substantially during the first quarter implying no pressure to start even thinking about rate hikes this year (the OIS-implied likelihood gives approximately 25% chances for such a move till the end of 2018). Annual price growth decelerated to 1.1% from 1.6% matching economists’ expectations though. A quarterly basis turned out to be more upbeat as it printed 0.5% slightly beating the consensus at 0.4%. Either way, there is neither momentum in quarterly readings which may justify a wait-and-see stance of the RBNZ for an extended period of time.

link do file download linkNZ inflation slowed down close to the lower bound of the RBNZ goal making any rate hikes this year yet more elusive. Source: Macrobond, XTB Research

US President Donald Trump and Japanese Prime Minister Shinzo Abe agreed on Wednesday to start talks for free, fair and reciprocal trade deals. Abe added that “our country’s position in that TPP is the best for both of out countries”. Trump responded that he does not want to go back into TPP, but if they (Japan) offer a deal that he does not refuse on behalf of the United States, he would do it. The event had a contained impact on the Japanese yen, and the currency is trading even subtly higher against the greenback in early trading.

link do file download linkA slowdown in NZ inflation may convince sellers to open fresh positions as the kiwi keeps trading in the vicinity of a supply zone at 0.74. In the long-term the NZDUSD is more likely to be driven by USD weakness rather than a hawkish stance shared by the RBNZ. Source: xStation5