The Australian market has got a huge lift this morning as the unemployment rate massively beat expectations to come in at +61K (+19k exp). Adding further positives to it all was the jump in full time jobs to +42K and of course the participation rate lifting to a strong 65.5% (65.1% exp). After all the talk about the Australian economy struggling this will be welcome relief for the Reserve Bank of Australia heading into the new year, especially around the full time rate we've seen - proving it's not all part time jobs in the build up to the Christmas season. The Reserve Bank of Australia will be watching this closely to see if the recent employment growth correlates with a lift in wages given the inflation we've seen globally. If we do see wages lift we can expect the RBA to look to lift interest rates in a hurry in order to make sure growth does not overheat and the economy is stable. But for now the AUD bulls are enjoying the rewards of the recent positive data and the weaker USD after the FED meeting
On the charts the AUDUSD bulls have been surging ahead after enjoying all the recent economic data. For many this is a turning point as the AUDUSD has been sluggish recently with all the bullish USD traders and of course the AUD looking a bit weaker given the recent slump in commodities. The jump higher though is likely to struggle against resistance at 0.7687, as not only is this a key level but the 200 day moving average is also aligned here so it will give traders a tough time. Further extensions higher than this are likely to find the next level at 0.7746. Support levels on the other hand can be found at 0.7624 and 0.7564 in the current market climate. However, it's unlikely they will see much action unless the USD strengthens or we see weaker AUD data further down the track.
All eyes were on Yellen this evening as the FOMC delivered the widely expected rate rise to push US interest rates to 1.5% (still well below the average) as Yellen's swan song showed that the US market still had plenty to give, but with an ear of caution as well. Expectations are that we will see three rate rises next year as expected, but also inflation was not as good as expected. Many are now wondering if the Tax bill will help push inflation above the 2% mark which analysts are hoping for.
One of the biggest movers on the back of all this was the USDJPY which dived on the FED news, as USD bulls sold off. However, it still looks weak to the majority given the recent drive in the USD to boost the economy. Markets will now be looking to see if it can surge back upwards and put pressure on that 113.837 level which has been the key target thus far. Alternatively if we do see further falls it could be a case of further ranging in this market climate.
