Australian Unemployment Drops to 5.5%

At the open of the US trading session, the major indices looked like having a bad day as the Dow Jones was down 0.4% within the first 30 minutes of trading. From this point on, however, the index climbed steadily throughout the day to eventually close virtually unchanged. Speculation on who will be chosen to replace Janet Yellen as the chair of the Federal Reserve appears to be having a significant market impact. Current betting odds suggest Jerome Powell is the front runner. Powell is considered a monetary dove meaning that he is more likely to keep rates low rather than keep raising them. Trump is expected to make his final decision by early November.

Yesterday Australia's employment data was released yesterday which showed a drop in the unemployment rate to 5.5% with 19,800 new jobs created. Although most of the new jobs were part time, there was still a gain in full time jobs too. The trend unemployment rate is now at its lowest level since March 2013. Lower unemployment is considered good for inflation and therefore increases pressure on the Reserve Bank to raise interest rates.

China's GDP was released yesterday, coming in on expectations of a 6.8% rise. Although this is not nearly as high as the 10%+ number that China had back in 2010, it is still one of the highest GDP growth rates in the world. China's industrial production was higher than expected at 6.6% as was retail sales with a growth rate of 10.3%.

Gold prices had a strong session rising almost 0.8% with the rumour the Powell is now front-runner for Fed Chair helping the price along. A dovish Fed Chair is considered bullish for gold since lower interest rates are generally considered a positive for gold prices.

ASX 200 futures are pointing to a lower open this morning.  

Data Releases:

–    Canada CPI & Retail Sales 11:30pm AEDT

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This article was written by William O'Loughlin – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via william.oloughlin@rivkin.com.au or by phoning +612 8302 3633.