During the Asian session, RBA Assistant Governor Sarah Hunter shared insights on the current economic situation, highlighting the impact of high rates on demand during what should be a mild downturn.
Key Takeaways from Sarah Hunter:
- The labour market is still tight compared to full employment levels.
- Improvement in labour market balance since late 2022.
- Easing in the labour market consistent with past mild downturns.
- Anticipated decrease in labour demand due to a drop in average hours.
- Expectation of employment growth, albeit at a slower pace than population growth.
- Potential for vacancies to decline without a significant increase in unemployment.
- Surprise at the strength of the participation rate compared to peer economies.
- High uncertainty in the outlook with forecasts likely to have inaccuracies.
- Indications of slowing wage growth following easing in the labour market.
Market Response:
The AUD/USD pair shows minimal movement, hovering around the mid-0.6600s range near the 100-day SMA. Traders are awaiting the US Consumer Price Index (CPI) report for directional cues.
Analysis: Sarah Hunter’s comments shed light on the current state of the labour market amidst the ongoing economic downturn. The impact of high rates on demand and the expected easing in labour market conditions could have implications for employment and wage growth. Traders are closely monitoring these developments to gauge the overall economic outlook and potential market movements. Understanding these dynamics can help individuals make informed decisions regarding their finances and investments.