• Australia posts strong job gains, but mostly part-time jobs
• US retail sales and PPI accelerate, core CPI eases

The Australian dollar climbed higher after the solid Australian employment release but has pared these gains following the US retail sales and producer prices reports. In the North American session, AUD/USD is trading at 0.6440, up 0.28%

Australia’s labour market flexes its muscles

Australian job creation sparkled in August. The economy added 64,900 jobs, blowing past the consensus estimate of 25,000 and rebounding from a revised decline of 1,400. However, the gains were almost exclusively in part-time roles, with full-time employment rising by only 2,800. The unemployment rate remained unchanged at 3.7%. The Australian dollar responded by rising as high as 0.6454, a nine-day high.

The Reserve Bank of Australia has held rates for three straight times and this has contributed to today’s positive employment numbers. The extended pause has raised expectations that the RBA is close to wrapping up its rate-tightening cycle, but given that inflation is at 6%, double the upper range of the RBA’s target, the door is still open for one more rate hike in the fourth quarter. New RBA Governor Michelle Bullock has said rate decisions will be made based on the data, which means the markets won’t be able to rely on any forward guidance from the RBA.

US retail sales, PPI beat estimates

US retail sales accelerated in August to 0.6% m/m, higher than the consensus estimate of 0.2% and a notch higher than the 0.5% gain in July. The main driver of the strong release was gasoline prices, which jumped over 10% in August (that increase was a key factor in headline inflation rising on Wednesday).

Producer prices mirrored the August CPI data, with headline PPI rising while the core rate declined. PPI climbed 0.7%, higher than the July read of 0.4% and the market consensus of 0.3%. Core PPI dropped to 0.2%, down from a revised 0.4% in June and matching the consensus estimate. On an annualized basis, headline PPI rose from 0.8% to 1.6% (1.2% est.) while the core rate dropped from 2.4% to 2.2% (2.2% est.).

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AUD/USD Technical

• AUD/USD tested resistance at 0.6453 earlier. The next resistance line is 0.6528
• 0.6405 and 0.6330 are providing support

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