Employment in Australia continued to trend higher last month, causing the Euro Australian Dollar (EUR AUD) exchange rate to tumble as investors welcomed the news.
Data published by the Australian Bureau of Statistics (ABS) shows that the Unemployment Rate unexpectedly slipped from 5.9% to 5.7% in April, reaching its lowest levels since January as Australia’s labour market saw employment rise for the seventh consecutive month.
With the Australian economy welcoming 37,400 new workers to the labour force last month, the total number of Australian’s in employment climbed to 12.09m, its highest level on record.
The rise in employment appears to have been largely led by the commodities sector as job website SEEK reported a 70% rise in the number of jobs being advertised by the mining sector over the last three months, following the sharp increase in commodity prices at the start of the year.
However the Aussie’s advance was slowed somewhat by the accompanying figures for full-time employment as the number of full-time positions being created plummeted from 73.9k to -11.6k last month, with the Reserve Bank of Australia (RBA) previously warning that strong full-time employment would be necessary for any future rate hikes.
EUR AUD was also undermined by an uptick in iron ore markets as prices for Australia’s largest export jumped 1.68% to $62.20 a tonne, pushing it further away from the $60 a tonne barrier, with some observers suggesting that this could signal an end to the recent rout.
Analysts at Credit Suisse said;
‘Given solid demand on the ground, record iron ore consumption, and our view that the macro environment will be positive into the year end, we believe risks are now weighted to the upside for the iron ore price in Q3.’
Meanwhile the Euro was quick to mount a recovery this morning as France’s own employment figures impressed investors, with the jobless rate sliding from 10.0% to 9.6% in the first quarter, falling below 10% for the first time since 2012.
Investors are hopeful that radical reforms by new French President Emmanuel Macron will help keep unemployment below double digit levels as he plans to ease the country’s rigid labour laws, although he faces some resistance from opposition parties and Unions who fear that worker’s rights may be eroded.
There were also worries that the fall in unemployment could prove to be temporary as the lack of growth in employment levels suggests that France’s economy is still not creating the number of jobs required to sustain the lower levels of unemployment.
Of particular concern is youth unemployment, which remains stubbornly high at 21.8%, one of the highest rates in the Eurozone.
Looking ahead, the EUR AUD exchange rate may stumble again this afternoon following a speech by European Central Bank (ECB) President Mario Draghi.
Analysts predict that Draghi is likely to reaffirm his commitment to the Bank’s accommodating stimulus package and record low interest rates, despite the recent uptick in Eurozone inflation.
Meanwhile, a lull in domestic data may leave the Australian Dollar vulnerable for the remainder of the week.
Current Interbank Exchange Rates
At the time of writing the EUR AUD exchange rate was trending around 1.4986 and the AUD EUR exchange rate was trending around 0.6673.