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Talking Points:

  • Australian Dollar Gains as October Jobs Data Beats Expectations
  • Net Jobs Gain 58.6K vs. 15K Expected, Jobless Rate Down to 5.9%
  • Upbeat News-Flow Pours Cold Water on RBA Rate Cut Speculation

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The Australian Dollar ralliedagainst its US counterpart after October’s Employment data crossed the wires. Australia gained 58,600jobs, topping economistsexpectationsof a 15,000increase. This is the largest amount of jobs gained over the course of one month since March 2012.

Most of the hiring surge came from full-time positions (+40,000). The country also gained18,600 part-time jobs. The participation rate increased to 65.0 percent from 64.9. The unemployment rate decreased to 5.9 percent, the lowest level since May 2014.

Last week, the Reserve Bank of Australia (RBA) maintained a data-dependent monetary policy outlook. Australian 2-year government bond yields rallied alongside the currency as the data crossed the wires. This seemed to suggest that today’s upbeat release weighed against the perceived probability of an RBA interest rate cut in the near term.

At the beginning of this week’s trading session, overnight index swaps were pricing in at least one RBA rate cut over the next twelve months (-25 basis points). That probability appears to have now faded. In addition, the implied probability of the Reserve Bank of Australia cutting rates at its December meeting is now almost zero.

Australian Dollar Rallies as Jobs Data Diminishes RBA Rate Cut Bets

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