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16/05/24
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AUD Soars After Inflation in US Eases
On Thursday the Australian dollar was down after soaring 1% on Wednesday. AUD/USD traded at about 0.6671, 0.33% lower for the day.
In April, employment in Australia bounced back with a 38,500 increase after March’s drop of 5,900 in and above the market consensus of 23,700. The rebound was however not as impressive as it seemed, as full-time employment dropped by 6,100. The unemployment rate lifted from 3.9% to 4.1%, and the highest level since Jan.
The Reserve Bank of Australia wants to see weaker data before it cuts interest rates, and the employment report may indicate some cracks in the labor market. If labor data continue to ease, a rate cut before the end of this year is possible. Wage growth in the first quarter eased, which may indicate that inflation is heading down.
US CPI in April dropped to 3.4% y/y, down from March’s 3.5% and the same as the market consensus. CPI edged down to 0.3% monthly, down 0.4% in March, and the same as the market consensus.
Core CPI fell to 3.6% from 3.8% y/y y/y and to 0.3% from 0.4% m/m, the same as the market consensus.
The drop in inflation increased expectations of a Fed rate cut and pushed the Australian dollar higher.
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