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Traders had been increasingly positioning for a hawkish Fed and this changed swiftly after the minutes showed no major changes to the Fed’s communication/language. The minutes were actually more aligned to what Janet Yellen has been saying with regards to rates being on hold for a considerable time after asset purchases end, and highlighted slack in the labour market. The Fed also highlighted communication challenges associated with the considerable time reference.
Jobs numbers fall short, but are they reliable?
The USD lost ground across the board, with AUD/USD managing to trade back above the $0.8800 level. AUD/USD has been a significant beneficiary of USD weakness over the past couple of days and was back in focus today with local jobs numbers being released.
There has been quite a stir surrounding the ABS and how Australian jobs numbers are calculated recently after a monster jump in August and consequently revisions for July and April. As a result, I think from today’s data the market just wanted to see some sort of normalisation no matter what the reading was. Anything out of the ordinary was never going to be taken credibly.
Today’s data showed 29,700 jobs lost, which was much worse than an expected +15,500. The unemployment rate remained steady at 6.1%, but the participation rate dropped a whopping 0.4%.
AUD/USD’s initial reaction to the numbers was negative but has since managed to recover presumably as the market questions the reliability of the data. The pair is now consolidating around $0.8850 and looks primed for a squeeze into the $0.8900 region.