AUS dollar hit by unsupportive employment data, but Aussie registers advances against pound sterling

A look at the currency markets in early afternoon trade in London shows the pound sterling to Australian dollar is 0.05 pct up on last night's close at 1.6904.

(Are you worried the British pound is on the way down again? Did you know you can lock in these rates for a transaction at a future date? We suggest getting in touch with an independent FX provider to mitigate your currency risk. We recommend speaking to FCA-regulated TorFX).

Bank of England non-event

The British pound remains under pressure across the global currency markets with no changes to policy being made at the Bank of England.

The Bank also failed to release a statement; this was always seen as a potential catalyst for further currency moves.

Australian labour force data fails to impress, but interest rate expectations maintained

While up against the pound sterling, the Aus dollar has generally been struggling today.

Ipek Ozkardeskaya at Swissquote Bank says weaker-than-expected employment change offset the improvement in unemployment from 5.8% to 5.6% in September, "the contraction in the participation rate certainly was the heavy number, putting the Aussie under selling pressure."

Justin Fabo at ANZ Research seeks to paint a more positive picture of the data:

"Today’s labour force report for September was a little mixed but not far off the median economist expectation.

"Employment growth was modestly softer than market expectations but the unemployment rate declined (by 0.11ppts) which was a little better than expectations for an unchanged outcome. In trend terms, employment remained unchanged in September."

From an interest rate and currency perspective Fabo says the figures are in line with RBA expectations:

"At this stage we expect the cash rate to remain around its current level through much of 2014. Markets now have just a 40–45% chance of a further 25bp rate cut priced in and expect the cash rate to be at 2.75% by end 2014.

"In our view, while low interest rates are providing a tailwind to some sectors, the Australian dollar (at above USD0.94) remains higher than where the RBA would prefer it.

"Moreover, it remains far from certain that the transition in Australia’s growth drivers will be relatively smooth once mining investment begins to fall sharply from around mid next year."