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An unexpected 46.3K increase in Australian employment last month provided the Aussie with a lift overnight, but unfortunately this has proved fleeting. Closer examination of the jobs release suggested that the labour market’s underbelly remains weak. Firstly, January is invariably a particularly difficult month for the statisticians in terms of making the correct seasonal adjustments - the first month of the year is naturally a time of significant job losses, especially (for example) in the retail sector. Secondly, hours worked actually declined last month, which rather flies in the face of the headline regarding large job gains. Finally, notwithstanding January’s jump, employment is essentially unchanged since March of last year. Moreover, a number of companies have already announced significant job cuts this month.
As a result, it is understandable that the currency has rapidly dismissed the jobs report. Instead, the focus remains very much on the incredibly unstable situation in Greece, which in the last couple of days has triggered a flight out of the euro and into dollars. If the predicament in Greece worsens further in the near term, risk aversion could re-emerge which might adversely impact on the Aussie.
