Key Takeaways
- Australian 10-year bond yields fell 6 basis points to 5.345%.
- The Aussie dollar edged up to $0.6960, still near multi-month lows.
- Unemployment in Australia rose to a five-year high of 4.6% in August.
The Australian and New Zealand dollars found temporary support on Friday, as a decline in Treasury yields provided some relief to the greenback, boosting bond markets globally.
Australian 10-year bond yields fell by 6 basis points to 5.345%, moving away from a recent 15-year high of 5.428%.
The Aussie dollar, which had hit a trough of $0.6933 overnight, steadied at $0.6960, though it remains near multi-month lows, with support at $0.6904 and resistance at $0.6990 and $0.7045.
The kiwi dollar held at $0.5603, down 0.2% for the week, facing the risk of a seventh consecutive week of losses if it breaks the recent 10-month low at $0.5581, potentially threatening a retreat to $0.5485.
The Australian jobs report for September, scheduled for Thursday, is a major event, following a surprise rise in unemployment to a five-year high of 4.6% in August.
The unemployment rate increased due to more people entering the job market, partly because of higher mortgage rates and cost-of-living pressures, despite a 39,500 increase in employment.
Westpac economist Ryan Wells noted that this trend shows the labour market is becoming more slack, which could ease Reserve Bank of Australia (RBA) concerns about inflation and lessen the need for further interest rate hikes.
Markets currently imply a 30% chance of an interest rate hike in November, rising to 46% for December, but Wells expects the RBA to be cautious given the current economic conditions.
The upcoming data release next week, including the Australian jobs report, will be crucial in determining the direction of the Australian dollar and bond yields.
Australian 10-year yields fell 6 basis points to 5.345%, nudging them away from the recent 15-year top of 5.428%.
Business Recorder, News Source
This tells us that slack is continuing to build in the labour market even as headline employment growth remains relatively resilient.
Ryan Wells, Westpac Economist
