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Risk-off trading sentiment is heightened after Australia’s December labour market report showed unemployment above expectations and a net loss of jobs in the month against a rise expected.
Admittedly, some of the disappointment was reduced by the job losses being in part-time while full-time job numbers rose, however, risk-on assets probably needed to correct.
In terms of market reaction, the AUD/USD extended its Wednesday fall to lows under the 0.6900 level and has only been above to stage a mild recovery after moving above 0.7000 earlier this week.
Breaking down the report, Employment in Australia unexpectedly declined by 14,600 to 13.75 million in December 2022, missing market forecasts of a 22,500 gain and after a downwardly revised 58,200 jump a month earlier.
The latest reading marked the first drop in employment since July, with part-time employment dropping by 32,200 to 4,128,100, while full-time employment increased by 17,600 to 9,619,000. Over the year to December, employment gained 469,700 or 3.5 percent.
The seasonally adjusted unemployment rate in Australia unexpectedly stood at 3.5% in December 2022, unchanged from an upwardly revised figure in November and compared with market estimates of 3.4%.
The latest print remained near five-decade lows, as the number of unemployed increased by 5,800 to 499,800, with people looking for full-time jobs rising by 1,400 to 326,100, and those part-time work up by 4,400 to 173.600.
The participation rate fell to 66.6% from a record high of 66.8% in November, below consensus of 66.8%. The underemployment rate went up to 6.1% from 5.8%; while the underutilization rose to 9.6% from 9.3% which was the lowest rate since February 1982.
Interestingly, the NZDUSD pair traded a little lower with AUDUSD. New Zealand’s Prime Minister announced she would be resigning on February 7 and not contesting the upcoming election in October this year. PM Jacinda Ardern has been in the job for just over 5 years and said as her reason.
