USD: BBDXY - Breaks Below 1210 Extending Its Losses

The overnight range was 21.5902 - 21.6816, Asia is currently trading around 21.6600.  The pair continues to find demand on dips and while the 21.30-21.40 support area holds I suspect this will carry on. With risk building on its recent gains and Japanese Policy keeping the JPY under pressure it is looking to test the 21.70/75 resistance area. A break above here would turn the focus back toward the highs of 2024 seen around the 22.20 area.

Fig 1 : CNH/JPY Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

The overnight range was 178.12 - 178.74, Asia is trading around 178.65. The pair is back to testing the year's highs again as dips remain very well supported as sentiment in risk has surged and Japanese Policy keeps the JPY under pressure. The move is looking a little overdone as it flirts with levels not seen since the early 1990s but I suspect dips will continue to be supported in the short-term though as the trend remains your friend. The first support is back toward 1.7600 which held last week and then the more important 174.00-175.00 area.

Fig 1 : EUR/JPY Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

After the unemployment rate rose 0.2pp to 4.5% in September, the October jobs release will be monitored closely to see if there is some stabilisation as the data can be volatile on a monthly basis. Bloomberg consensus expects it to fall 0.1pp to 4.4% with new jobs up 20k and the participation rate stable at 67%. RBA Governor Bullock has advised to look at the data on a 3-month average basis.

• The unemployment rate is widely expected to normalise somewhat at 4.4% but there are a few economists who expect it to stay at 4.5% or fall back to 4.3%. All of the big four local banks are forecasting a 0.1pp decline to 4.4%. The Q3 average was 4.3%.
• Employment projections are between 10k and 45k. CBA and NAB are in line with consensus at 20k after September’s 14.9k increase. ANZ and Westpac are not as optimistic expecting a 15k rise. Job gains averaged 12.3k in Q3.
• The break down between full-time (FT) and part-time (PT) employment and hours will also be important as a shift to more part-timers signals less confidence in the outlook by employers. FT jobs averaged 10.2k in Q3 and PT 2.1k.
• RBA Governor Bullock has noted numerous times that the central bank looks beyond the headline labour market figures. In terms of Thursday’s release, the underemployment and youth unemployment rates will also be important. They averaged 5.8% (Q2 6.0%) and 10.0% (Q2 9.6%) in Q3 respectively. Hours worked are another focus point.