PREVIOUS TRADING DAY EVENTS 17 May 2023

Announcements  

Australias employment data were released during the Asian session at 430 today. AUD depreciated bringing down major pairs with AUD as the base currency, such as AUDUSD, experiencing a near 30 pips drop before retracing. Australias headline Employment Change report showed a surprise figure of 4.3K in April versus 25K expected and the previous 53K figure, whereas the Unemployment Rate jumped to 3.7 from the previous 3.5. 

Australias hot labour market might be cooling. The policymakers might take this as a signal that their last surprise rate hike to 3.85 was enough and now they consider a pause next month.

We expect to see a gradual softening in labour market conditions over 2023 as the impact of interest rate increases to date start to bite, said Sean Langcake, head of macroeconomic forecasting for Oxford Economics Australia.

Whether todays data are the start of that process or just typical volatility will be a key question at the upcoming RBA meeting. At the margin, these data weaken the case for another rate hike, Langcake added.

The Wage Price Index qq figure was released yesterday. The seasonally adjusted WPI rose 0.8 this quarter and 3.7 over the year. The RBA believes this is important.

Todays data and WPI yesterday together reduce the risk the RBA would opt to raise rates again as soon as June and together are helpful at the margin on the skew of risks around the RBAs inflation outlook, said Ivan…