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Preview - Strong Aussie Job Growth to Solidify Additional RBA Hike
The recent round of fundamentals from Australia paint it as one of the most resilient to the threat of the credit crunch economies. The most recent figures on demand in housing show construction index at a 15-month high. Likewise, the latest data from the retail sector reported last week indicate strong consumption trends and a pickup in food prices. No matter what the extent of Treasurer Costello's attempt to talk down the value of the Aussie is, Reserve Bank of Australia is taking notice, particularly with the August global liquidity crisis abating. Another strong figure from the labor sector, one whose ultra-tight conditions are feeding inflationary forces, would magnify the need for additional tightening in spite of a near-10% currency appreciation over the course of September. Last month, new job creation handily beat expectations of 18K, coming in just shy of 32K, and the Aussie saw significant gains over the next 24 hours. The projected 20K this month is still above trend relative to the two months prior to the stellar August reading that saw gains of 19K and 9K. Anything above 25K with unemployment rate at a 30-year low 4.3% would substantiate the perception of tightening labor conditions, leading to a more sustained breach of psychological 0.90 level going forward. A shortfall of 10K would spark more extended profit-taking from technically overbought levels that are showing bearish divergences. Former resistance turned support at 0.8910 visible on hourly charts is a key technical level attainable in the unlikely events of disappointing Aussie jobs today and recovery in US retail sales and consumer sentiment on Friday.