GBP AUD Weakens Ahead of Aussie Jobs Report

GBP AUD Weakens Ahead of Aussie Jobs Report

The GBP AUD exchange rate was -0.46% lower ahead of the latest Aussie jobs report. Traders are expecting an additional 50k jobs in the economy after the -138k reading from the lockdown damage in the previous month. The UK has data this morning in the form of GDP for the recent quarter and trade balance figures.

The AUD GBP exchange rate was trading at 1.8285 and will aim for the recent lows near 1.18100 with a strong jobs number.

Reserve bank policy flaws exposed with market chaos

The Financial Times has said that the “chaotic exit” from the RBA’s yield curve control has exposed the policy’s flaws.

The article said:

“…unlike asset purchases, which can easily be tapered when the economy improves, it is very difficult to make a smooth exit from a cap on bond yields.”

Governor Philip Lowe agreed that it was a failure, saying, “it’s quite unlikely that we will have a yield target again.”

“The RBA should have ended yield curve control in July 2021 rather than pegging the target to the April 2024 bond,” said Gareth Aird, head of Australian economics at Commonwealth Bank.

The RBA had tried to pin down bond rates at the bank’s 0.1% rate in the market for 2024 bonds. With rising inflation, traders got nervous and once the bank failed to defend the price level, the yield rocketed higher.

The Australian dollar is awaiting a jobs market update with an expectation of 50k jobs added. The RBA are close watchers of the country’s labor market, and a higher number will boost the Australian recovery outlook. Job advertising has seen a 13-year high in the country which is hoped will spur a strong return to higher employment.

“The Australian economy is powering out of this pandemic in a way that few countries are around the world,” PM Scott Morrison told reporters.

British pound awaits UK GDP and trade data

The pound sterling has data on Thursday with a 3-month update on GDP expected to show 1.5% growth for the latest quarter, down from 2.9%.

The UK also awaits trade balance data with the previous figure showing a trade deficit of -3.7 billion with a slightly lower goods trade balance of 14.3 billion.

A recent poll said that 44% of the UK public thought Brexit was damaging the economy. But Chancellor Rishi Sunak laughed at suggestions of damage and said it was “five years ago”.

“I think we’ve had all these debates multiple times, and I think this at this point now is five years ago,” he said.

Asked about the OBR’s assessment, Mr Sunak said: “That’s their view. What I’m doing is making sure that we capitalise on the opportunities that Brexit has brought.”

“We’ll be doing a lot on the trade agenda, and we’re seeing the benefits of that will bring to the economy, and our ability to sign trade deals around the country.”

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