"Leading into the jobs report there's probably a little position squaring in Aussie with some leading indicators pointing to a pretty soft underlying labor market"
- Peter Dragicevich, a currency strategist at Commonwealth Bank of Australia
The Australian Dollar posted its biggest fall in a month against the U.S. counterpart, following disappointing report that revived speculations about another rate cut from the RBA. The Aussie tumbled to the lowest level since mid-210 against the buck, while NZD/AUD soared to its five-year high.
As it was widely anticipated, Australian Bureau of Statistics reported no change in the overall jobless rate that remained at 5.8%, however, employment change surprised markets to the downside. At the same time, Oz labour market waned in December, as economy lost a net 22,000 jobs over the period, while a steep decline in participation confirmed earlier fears the economy is struggling to grow, as one of the country's largest commodity booms began to wane. During December Australia lost 31,600 full-time jobs, while only 9,000 part-time jobs were created. The participation rate fell 0.2% to 64.6%, coming below analysts' forecasts who claimed the rate will hold steady at 64.8%. It means that more Australians simply have given up on job hunting.
The resource-rich economy managed to avoid slipping into recession during the global crisis mostly due to an exorbitant demand from China's rapidly expanding economy.
© Dukascopy Bank SA