Pound-Australian Dollar Rallies on Aus Job Losses

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The pound puts in a strong 0.5% gain against the Australian dollar.

The Aussie dollar fell broadly after Australia's employment data disappointed on Thursday, suggesting maybe the recent 'hawkish' repricing in Australian interest rate expectations had gotten ahead of itself.

It was revealed employment fell 21.3K in November, which was far below the 20K growth the market was teed up for, down from 41.1K in October. 

Underlying data was unhelpful, with a sharp -56.6K reduction in full-time employment. Indeed, part-time employment rose 35.2K.

The Reserve Bank of Australia (RBA) has recently hinted that it would step back from lowering interest rates on account of a run of firmer-than-expected economic data, and that the next move could be a rise in rates.

Some warn that rate rise could come as soon as February.

However, these data push against that narrative of an early RBA rate hike, as the central bank could find itself conflicted by a soft labour market, judging that it could do with the support conferred by lower rates.

Of course, this data could yet be a one off and nothing to worry about.

Nevertheless, doubt creeps into financial markets, reflected in a softening of the Australian interest rate profile (lower short-term bond yields) and a lower Aussie dollar:

The pound to Australian dollar exchange rate (GBP/AUD) lifted from the cusp of the all-important 2.0 level to 2.0150 by the time of writing Thursday.

We have seen many similar rescue attempts by GBP in this vicinity since October, confirming the immediate run-up to 2.0 to be a formidable layer of support.