AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Firms on Strong Job Gains; U.S. Retail Sales On Tap

The Australian and New Zealand Dollars are trading higher on Thursday with the Aussie controlling the price action following the release of better-than-expected employment change data. Earlier in the session, prices were held in check by dovish comments from Reserve Bank of Australia Governor Guy Debelle.

There were no fresh developments out of China following the release of weaker-than-expected industrial production data on Wednesday. In the United States, the 30-year Treasury bond touched fresh historic lows as the yield between the 2 and 10 year Treasury note hovered around the inversion mark for a second session.

AT 08:34 GMT, the AUD/USD is trading .6778, up 0.0031 or +0.46% and the NZD/USD is at .6443, up 0.0009 or +0.14%.

Australian Employment Change Beats Expectations

The Australian Dollar is trading a little higher early Thursday after Australia’s labor market continued to confound the experts, by adding nearly three times the estimated number of jobs, while unemployment remained stubbornly unchanged as the labor force expanded further.

Today’s employment change report showed jobs rose 41,100 from June, compared to economists’ forecast of a 14,000 gain; the unemployment rate held at 5.2%, matching estimates.

Full-time positions jumped 34,500; part-time roles gained 6,700, while the participation rate climbed to 66.1% versus an estimate of 66.0%.

The Australian Unemployment Rate held steady at 5.2%.

RBA’s Debelle:  U.S.-China Trade War Risks Self-fulfilling downturn: RBA Official

The prolonged trade dispute between the United States and China is causing businesses worldwide to postpone investment decisions, hampering economic activity and risking a self-fulfilling global downward spiral, Deputy Governor Guy Debelle cautioned on Thursday.

“Businesses are waiting to see how the uncertainty resolves rather than invest,” he added. “The longer businesses hold off, the weaker demand will be, which will further confirm the decision to wait. That runs the risk of a self-fulfilling downturn.”

Daily Forecast

Although the markets reacted violently to yesterday’s brief inversion between the 2 year and 10 year U.S. Treasury note yields, with most headlines calling it a recession signal, the price action today suggests investors still aren’t sure what it means. One market strategist called it a warning for the Fed to take action in order to prevent a recession. This assessment may be helping to underpin the Aussie and Kiwi in addition to nearly stable global rates and the jump in Aussie jobs.

The economic report slate is full in the United States on Thursday. Minor reports include the Empire State Manufacturing Index, Preliminary Nonfarm Productivity, Preliminary Unit Labor Costs and Weekly Unemployment Claims at 12:30 GMT.

Capacity Utilization and Industrial Production at 13:15 GMT and Business Inventories and NAHB Housing Market Index at 14:15 GMT.

The major reports are Retail Sales and Core Retail Sales. They are expected to come in at 0.4% and 0.3% respectively. Traders will be watching this report closely because the consumer has been supporting the economy. The reports come out at 12:30 GMT.

Also at 12:30 GMT is the Philly Fed Manufacturing Index. It is expected to come in at 10.1, down from 21.8. This report is also important. I think Industrial Production, which is expected to come in at 0.1%, at 13:15 GMT, is underrated. A negative number is likely to weigh on interest rates.