AUD: Stronger employment report offsets credit rating warning - MUFG

Lee Hardman, Currency Analyst at MUFG, suggests that the Australian dollar continues to derive support so far this year primarily from the easing of economic growth concerns in China and dampened Fed rate hike expectations.

Key Quotes

“Further evidence that the Australian labour market continues to improve has provided support for the Aussie overnight as well. The latest report revealed that the unemployment rate continued to decline to 5.7% extending its decline to 0.5 percentage point over the last year. Employment growth continues to remain solid expanding at an annual rate of 2.0%. The report supports expectations that the RBA will keep policy unchanged this year.

The positive developments have helped to offset the credit rating warning from Moody’s overnight ahead of the 3rd May federal budget. Moody’s stated that without revenue-raising measures, limited spending cuts are unlikely to meaningfully advance the government’s aim of balancing the budget and debt is likely to continue to climb which would be credit negative. The negative impact of the announcement on the Aussie is likely to prove only fleeting.”