AUSTRALIA: Consensus Expects Some Normalisation In July Labour Data
With May and June employment gains disappointing, the July data will be monitored closely for signs that the labour market has turned. Q2 employment averaged 28.8k/month up from Q1’s 1.4k but slightly lower than Q2 2024’s 32.2k. Bloomberg consensus expects a 25k gain in July after June’s +2k, slightly below the Q2 average. The unemployment rate is forecast to decline 0.1pp to 4.2%, returning to the Q2 average.
- In its updated staff projections on Tuesday, the RBA continued to expect the Q4 2025 unemployment rate to be 4.3% and then stay there. Employment growth was revised up to 1.6% from 1.4% in Q4 2025 and it then slows to 1.4% and remains there over the rest of the forecast horizon.
- The employment component of the NAB business survey is signalling that labour demand growth is slowing and so we may see average job prints trending lower over coming months.
- Analysts’ projections for job gains in July range from +12k to +50k with most between +15k and +35k. The large local banks are clustered around consensus with ANZ and Westpac in line, but CBA and NAB slightly lower at 20k and 23k respectively.
- Unemployment rate expectations are between 4.2% and 4.4% with NAB and Westpac forecasting it to drop 0.1pp to 4.2%, but ANZ and CBA expecting it to stay at 4.3%.
- The participation rate is projected to be steady at 67.1%.
Australia NAB business survey employment vs employment y/y%
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AUSSIE BONDS: Slightly Cheaper, Narrow Ranges On A Data-Light Session
ACGBs (YM -1.0 & XM -3.5) are slightly weaker on a data-light session. Ranges have been narrow.
- Cash US tsys are slightly mixed, with a steepening bias, in today’s Asia-Pac session after Friday’s bear-steepener.
- Cash ACGBs are 2-3bps cheaper with the AU-US 10-year yield differential at -5bps.
- The bills strip is slightly cheaper, with pricing -1 to -2.
- RBA-dated OIS pricing is slightly firmer across meetings today. A 25bp rate cut in August is given an 88% probability, with a cumulative 59bps of easing priced by year-end (based on an effective cash rate of 3.84%).
- “The Reserve Bank of Australia is set to start a fresh round of monetary easing in August, followed by further cuts in November, February 2026, and May 2026, Westpac said Friday.” (MTN via BBG)
FOREX: Yen Longs Trimmed, CAD Shorts Added To
The most notable feature of last week's CFTC FX positioning update (for the week ending July 8th), was the cut back in yen long positioning, see the table below. Leveraged players cut JPY net longs by close to 10.6k, but maintained an outright long of just over 5k. Asset managers were more modest in their trimming (-5.4k). These moves follow USD/JPY's rebound back above 147.00 recently. USD/JPY was also supported on dips last week, which may hint at more trimming of JPY longs. Focus remains on trade negotiations as the Aug 1 deadline approaches (when tariff rates rise to 25%).
- Elsewhere for EUR and GBP, leveraged and asset manager position shifts were mixed. Leveraged players trimmed EUR longs almost back to flat, but asset managers raised their net long position by more.
- For GBP/USD it was the opposite, but aggregate positioning was little changed.
- For AUD, leveraged players trimmed net shorts, while asset managers sold more A$ modestly.
- CAD was sold by both leveraged names and asset managers, adding to outright shorts for both segments.
Table 1: CFTC Positioning Update - Weekly Changes, Outright Positions By Major Currencies
| Leveraged Contracts | Asset manager Contracts | |||
| Weekly Change | Outright Position | Weekly Change | Outright Position | |
| JPY | -10574 | 5224 | -5422 | 89331 |
| EUR | -3189 | 1843 | 8062 | 374805 |
| GBP | 4164 | 40643 | -4504 | -14294 |
| AUD | 3842 | -19061 | -2260 | -38252 |
| NZD | -230 | -8654 | 714 | 9229 |
| CAD | -1917 | -28985 | -5884 | -42270 |
| CHF | 129 | 1416 | -442 | -37274 |
| MXN | 787 | -5334 | 4820 | 44319 |
Source: Bloomberg Finance L.P./MNI
