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AUD/USD Rally Stopped By Jobs Data

FX:AUDUSD   Australian Dollar/U.S. Dollar
Australian employment unexpectedly fell 9.8k in September as firms shed a huge 53k full-time jobs. Thursday's data from the Australian Bureau of Statistics showed the unemployment rate stayed at a three-year trough of 5.6%, but only because more people stopped looking for work. Indeed, the participation rate dropped to its lowest since May 2014 at 65.5%. The fall in employment in September was also the second straight month of declines and confounded market forecasts for a rise of 15k.
Just this week Reserve Bank of Australia Governor Philip Lowe emphasised that rising underemployment and weak hours worked meant there was a lot more slack in the labour market than the unemployment rate on its own might suggest.
Consumer price data for the third quarter due next week will be crucial. A very low reading for underlying inflation could make a case for an easing as early as the RBA's November 1 board meeting, but it is not our baseline scenario. Surprisingly low readings for inflation prompted the RBA to cut rates in August and May, taking them to a record low of 1.5%.
Interbank futures still imply a 16% probability of an easing in November, though the AUD did take a knock on the jobs report.
The AUD/USD             rise was stopped near September high (0.7732), but the long-term outlook remains bullish . The nearest support level is 7-day ema at 0.7644.
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