RBA: Strong Headline Jobs Data, Details More Mixed
The headline figures for April signalled that the labour market remains tight with job growth keeping up with the labour force, thus both advertised salaries and the WPI showed a pickup in 2025. The RBA looks at other labour indicators and they have been mixed in Q1/April. It is widely expected to cut rates 25bp on May 20 but recent jobs and wages data are likely to mean that it maintains its cautious tone regarding future easing.
- Despite 89k new jobs, hours worked were flat in April after declining the previous two months and thus it is not surprising that the underemployment rate ticked up 0.15pp to 6.0%, the highest since November. This is also consistent with 3-month momentum in part-time employment outpacing full-time.
- The RBA sees the youth unemployment rate as a lead indicator of the labour market and that declined a further 0.05pp to 8.84% in April which is 1.1pp below the August 2024 peak and the lowest since November, a sign of robustness.
Australia unemployment rate 15-24 yrs %
- The vacancy-to-unemployment ratio fell in Q1 to 53.3% from 57% but still well above the 36.8% historical average. Using internet vacancies, the ratio fell through Q1 to the series average.
- SEEK job ads were little changed in Q1 but rose 1.8% m/m in April but were still down 5.7% y/y but well off the lows in the year following May 2023. After falling for three straight months, applicants/job rose in both February and March, indicating still solid labour supply.
- NAB’s measure of the availability of suitable labour as a severe constraint on Q1 production fell almost 5pp to 28.8%, the lowest in four years, and moving in the right direction to ease job market pressures but it is still above the series average.
Australia NAB labour availability a constraint
Source: MNI - Market News/LSEG
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FOREX: Antipodean Wrap - AUD & NZD Make New Gains
The AUD and NZD have both traded bid once more making new highs in Asia. In its minutes The Reserve Bank of Australia expressed caution over future interest-rate cuts, saying May would be an "opportune time" to revisit policy settings. The board will have additional data on the labor market, inflation, household spending, and global trade policies by the May 19-20 meeting, which would have a considerable bearing on the decision.
- AUD/USD - Asian range 0.6316 - 0.6355, AUD has traded quietly bid for most of the Asian session, breaking the overnight highs and going into the London open at the top of its range. Shorts will be hoping for sellers to return but will be watching the 0.6400 area this week for signs of the next leg of position squaring.
- AUD/JPY - Asian range 90.38 - 91.01, AUD/JPY was bid from the open and has drifted higher for the majority of the Asian session. Price goes into the London open around 91.00 pressing its highs. AUD/JPY is trying to build a base as risk stabilises, but it remains to be seen if it can this last. Expect supply once more back towards the pivotal 94.00 area.
- NZDUSD - Asian range 0.5861 - 0.5915, NZD has traded bid the whole session and there is still very little pullback. NZD printing around 0.591/5/20 going into London, having made new highs in the session.
- AUD/NZD - Asian range 1.0734 - 1.0779, the cross drifted lower in the Asian session before finding some buyers towards the 1.0740 area. The cross is going into London pretty directionless but the bias appears to remain for the upside to be capped, as liquidity in the NZD dries up quicker than for the AUD on any move higher.
Fig 1: AUD/USD Daily Chart
Source: MNI - Market News/BBG
GOLD: The Rally Returns for Gold.
- Having hit new highs, yesterday saw gold slip lower into the close as profit taking on strong gains was evident yet in the Asian trading day, the rally continued.
- Gold opened at $3,210.93 and had a slow start to the trading day before jumping to $3,228.33, a gain of +0.54%
- South African miner Gold Fields Ltd has been ordered to stop mining its lease and leave one of its mines in Ghana after the rejection of a lease extension.
- West Australian miner Bellevue Gold is the target of several takeovers as the soaring cost of gold eats into its cashflow due to soaring hedge costs.
- The PBOC is offering increased quotas to banks for gold imports to meet the domestic demand from institutional and retail investors.
- Gold remains steadfast above all major moving averages with the nearest, the 20-day EMA, at $3,091.86
US TSYS: Yields Drift Lower in Today's Asia-Pac Session
TYM5 has traded in a tight 110-19/110-27+ range so far in today's Asia-Pac session. Going into the London open, it is dealing near its highs around 110-26,+0.02 from its close.
- The US 10-year yield has continued to drift lower in a tight range of 4.3408 - 4.3856 in Asia. Going into the London open dealing around 4.3485%.
- The market is starting to realise the FED will not be stepping in to rescue it by cutting rates, as long as it expects inflation to track higher on the back of Trump’s policies.
- The Fed’s Waller said yesterday the impacts of the tariffs on inflation would be temporary. He also described the new policy as “ one of the biggest shocks” on the US economy in decades, the effects of which are highly uncertain.
- Bostic spoke after the US market close: ”Right now range of possible outcomes has multiplied. Inflation still much higher than target. Not in position to boldly move in any direction, need more clarity.”
- Bessent says the Treasury has a big toolkit if needed for Bonds.
- Dips in the 10-year yield back towards 4.25/30% should now find supply, any move back to 5% and above would become problematic for equities.
- Upcoming Data/Events: Retail Sales and Fedspeak from Powell on Wednesday.
