The Australian dollar rose on a very strong jobs report for December 2021 with the unemployment rate falling to its lowest since 2008 and near a 50-year low. As noted in the data post (see bullets above) the survey for the report was conducted prior to the Omicron outbreak taking hold, which means there will be weaker reports ahead for January and February. Still, the headlines were strong and AUD/USD was taken higher.

Prior to the publication of the jobs report Westpac joined CBA in issuing a note forecasting a Reserve Bank of Australia rate hike in 2022. WPAC was previously looking for a rise in February of 2023 but have shifted forward now to August this year (+15bps followed by +25bps in October 2022 is their projection). Australia’s largest fund manager (AMP) is, so far sticking to its call for a November ‘22 hike but acknowledge after the jobs report that the risk is increasing that it will come earlier. UPDATE – no they are not, AMP have joined the call for an August rate hike from the RBA.

Following soon after was the news out of China that both the 1- and 5-year Loan Prime Rates (LPR) were cut (see bullets above). This had been widely expected following the cuts to both the rate on the 1-year Medium-Term Lending Facility (MLF) and on the Reverse Repo (RR) earlier in the week. China has pivoted to plenty of ‘supportive policy’ statements, and now actions. This comes as the property sector is seeing a slow-motion implosion under the weight of debt that is not being repaid, and a strict ‘covid-zero’ response to Omicron outbreaks weighing on the economy.

The Australian dollar rose after the strong jobs report and, as I post has subsided to now be little changed on the session. EUR and GBP, too, rose against the USD only to see some give-back. USD/JPY dropped towards 114.00 but has since come back to be barely changed on the session. The supportive China policy played a role in the small weakness for the USD.

For oil, it fell back also after more strength on Wednesday. China said it imported oil from Iran in December 2021, the first shipment since the same month in 2020.

The Australian unemployment rate is at its lowest in nearly 50 years:

Australia jobs 20 January 2022