Global macro analysis for 19/10/2017

Global macro analysis for 19/10/2017:

Australia's September labor report was another upside surprise, with 19.8k jobs growth and a further fall in the unemployment rate to 5.5% from 5.6% in August (consensus: 15k and 5.6%). Part-time jobs rose by 13.7k, almost same rise as in August, while there was a sharp slowdown in the full-time jobs to 6.1k from 39.5k. The participation rate was steady at 65.2%. Steady part-time jobs growth and participation rate indicate that even new entrants to the labor force are finding it easy to obtain work. However, strong jobs growth needs to translate into private consumption, which hasn't been the case so far. A dismal retail sales growth in August reduced the likelihood of an early RBA rate hike and this point of view was reiterate in the recent RBA Meeting Minutes.

According to the Minutes, the RBA members noted that the Australian economy had grown by 0.8% in the June quarter, in line with the Bank's forecast. Moves towards higher interest rates in other economies were a welcome development but did not have mechanical implications for the setting of policy in Australia, where the timing of any changes in interest rates would be dependent on developments in domestic economic conditions.

Let's now take a look at the AUD/USD technical picture at the H4 time frame. The market bounced from the black trendline support around the level of 0.7808, but no new high was made so far. The move up was capped at the level of 0.7875 and now the price is moving sideways. The upward momentum is not increasing too much which might indicate a possible move down to test the level of 0.7808 again.

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