Synopsis:
Credit Agricole maintains its end-2024 AUD/USD forecast of 0.68, citing a robust Australian jobs report that exceeded market expectations, supporting the Australian dollar amid broader economic challenges.
Key Points:
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Surprising Employment Growth:
Australia’s labour market data for September showed a significant increase in employment, rising by 64.1k jobs compared to the consensus forecast of 25.5k. The unemployment rate remained steady at 4.1%. -
High Participation Rate:
A record 67.2% of the working-age population is participating in the labour force, indicating a strong willingness to work, primarily driven by economic pressures. -
Full-Time vs. Part-Time Employment:
Full-time employment rose by 51.6k jobs, rebounding from a decline in August, while part-time jobs increased by 12.5k. Additionally, hours worked were up by 0.3% month-over-month. -
Inflationary Pressures:
The tight labour market, with a notable decrease in the underemployment rate from 6.5% to 6.3%, continues to exert upward pressure on wages, contributing to inflation. Despite this, GDP growth remains weak at just 1% year-over-year, indicating ongoing challenges in productivity. -
RBA's Diverging Stance:
Given the strong employment figures and a stable unemployment rate below its end-2024 forecast of 4.3%, the Reserve Bank of Australia (RBA) is expected to keep rates on hold, diverging from the monetary policies of other G10 central banks.
Conclusion:
In light of the strong jobs report and the RBA's likely stance, Credit Agricole remains optimistic about the AUD's resilience against a stronger USD and the challenges posed by China's economic slowdown. The bank's target for AUD/USD at 0.68 by the end of 2024 reflects this outlook.