AUD: In the green against the majors

• June RTI payrolls fell by -9k, against expectations of a +23k uptick. This is the first fall since February 2021, but should be interpreted with caution as revisions are often volatile.
• The May unemployment rate picked-up by +0.2pp on the quarter to 4.0%, against expectations of holding steady at 3.8%. This uptick was driven by a rise in May unemployment, which the ONS estimated jumped to 4.3% from 3.6% in April in the single-month data published alongside the report. This had previously been higher at 4.5% in August 2021.
• Despite the rise in unemployment, wages saw a further surge.
• Regular pay rose +7.3% 3m/yoy, the joint highest on record (back to 2001), seen again in the previous month's upwards revision and otherwise only in June 2021 where compositional and base-year effects distorted the number higher coming off the lockdown of the pandemic the year before.
• This increase was a 0.2pp beat on consensus expectations. Total earnings jumped 0.4pp to +6.9% y/y.
• The earnings data will make uncomfortable reading for the MPC, as wage growth continues to climb, despite policymakers saying they are starting to see some easing in tight labour markets albeit at a slower pace than they would like to see.

Source: ONS

• RES 4: 0.6857 High Jun 20
• RES 3:0.6768 High Jun 23
• RES 2: 0.6806 High Jun 22
• RES 1: 0.6721/0.6724 High Jun 27 / 1.0% 10-dma Envelope
• PRICE: 0.6658 @ 07:24 BST Jul 11
• SUP 1: 0.6596 Low June 29 and the bear trigger
• SUP 2: 0.6579 Low Jun 5
• SUP 3: 0.6562 76.4% retracement of the May 31 - Jun 16 rally
• SUP 4: 0.6485 Low Jun 1

AUDUSD remains in consolidation mode. The trend condition is bearish and recent gains are considered corrective. Price has recently breached the 20- and 50-day EMAs, suggesting scope for a deeper retracement. A resumption of weakness would open 0.6562, 76.4% of the May 31 - Jun 16 rally. Initial firm resistance is at 0.6721, the Jun 27 high. A break would suggest scope for a stronger correction.

Bund futures see two-way flows around the UK labour market data, which provided a downtick in payrolled employees for the month of June, while wages data was firmer than expected and was accompanied by positive revisions, which will provide a continued headache for the BoE. Elsewhere, final German CPI data was unchanged vs. the preliminary readings. Bund futures settle around pre-data levels, last +30 or so after leaning on the Asia-Pac bid in Tsys.

• Bund futures did manage a look above their Monday high, although technical conditions remain bearish. Our technical analyst highlights the Jun 16 low/Jul 6 high as the preliminary area of resistance (132.18/65), while initial support is seen at yesterday’s low (130.60).
• Yesterday evening’s ECB speak from Nagel & Herodotou did little to move the needle.
• ZEW data and further comments from ECB’s Villeroy provide the focal points of the regional calendar, while sovereign/SSA supply will come in the form of E5bln of the 2.40% Oct-28 Bobl, the Netherlands coming to market with E2.0-2.5bln of the 2.50% Jan-30 DSL and the syndicated tap of the EU’s 2.50% Oct-52 bond (we pencil in a transaction size of E5-6bln).