Thursday morning in Asia, the Aussie showed weakness against its major counterparts as Australia's unemployment rate jumped to a 5-year high in March, adding to signs the nation is in its first recession in almost two decades. The aussie thus fell to a 2-day low against the euro and the kiwi.
The Australian Bureau of Statistics said today that the nation's jobless rate rose to a five-year high of 5.7 percent in March from 5.2 percent gain in February and it also rose more than economists forecast of 5.5% increase.
The bureau also reported that the number of employed Australians decreased by a greater-than-expected 34,700 to 10,771,800. Most economists had forecast an overall job loss of 25,000.
The number of Australians employed full time decreased by 38,900 in March to 7.62 million compared to 7.66 million in February. Part time employment increased by 4,200 jobs to 3.15 million in March.
Another report showed that the median rate of inflation expected by Australians increased in April to 2.4 percent from the March rate of 2.2 percent. Survey results released by the Melbourne Institute showed the median inflation expectation for April was below the 4.5 percent figure reported for the same month last year.
With the Organization for Economic Cooperation and Development forecasting the steepest economic contraction in more than 50 years across its member nations, demand for resources has slowed from the world's biggest shipper of iron ore and coal, forcing mining companies to fire workers.
Rio Tinto will cut 705 jobs at projects in Queensland state, the world's third largest mining company said on April 7.
To stoke domestic demand, Reserve Bank of Australia Governor Glenn Stevens unexpectedly slashed the nation's benchmark interest rate by 25bps to a 49-year low of 3%. The Board judged that there was scope for a further modest adjustment to the cash rate. The stance of monetary policy, together with the substantial fiscal initiatives, will provide significant support to domestic demand over the period ahead, the central bank stated.
The government is also spending A$42 billion ($30 billion) on cash handouts to households and on infrastructure. Australia's mortgage rates are now at very low levels by historical standards and, along with a surge in government spending, will provide a significant boost to the economy, Stevens said on April 7.
The Australian stock market opened higher today, following modest gains on Wall Street overnight. In the local market, financial and resource stocks led the gainers. In early trading, the benchmark S&P/ASX 200 index is gaining 41 points or 1.14% to 3,661, after closing more than two percent lower on Wednesday. The broader All Ordinaries index is up 39 points or 1.08% to 3,606.
The Australian dollar slipped against the currencies of US and Japan in early Asian deals on Thursday. At about 9:30 pm ET, the aussie touched 0.7055 against the greenback and 70.39 against the yen, down from yesterday's close of 0.7106 and 70.89, respectively. If the Aussie weakens further, it may likely target 0.690 against the greenback and 69.5 against the yen.
In economic news from Japan, core machine orders unexpectedly climbed 1.4 percent in February compared to the previous month, the Cabinet Office said. That snapped a four-month string of decline, which was the stat's longest losing streak ever. The February figure came in higher than analyst expectations for a 6.9 percent decline after the 3.2 percent fall in the previous month.
During early Asian deals on Thursday, the Australian dollar declined to a 2-day low of 1.8775 against the euro and 1.2198 against the NZ dollar. The next downside target level for the Aussie is seen at 1.90 against the euro and 1.21 against the kiwi. The euro-aussie pair closed trading at 1.8689 and the aussie-kiwi pair at 1.2268 on Wednesday.
The Aussie, which closed yesterday's trading at 0.8787 against the Canadian dollar dropped to 0.8744 in early Asian deals on Thursday. On the downside, 0.866 is seen as the next target level for the aussie-loonie pair.
Traders will have a busy European session today, in which the German March final CPI, ECB monthly report, German and the Italian industrial production for February are expected.
Across the Atlantic, the US February trade balance, import and export price index for March and the weekly jobless claims reports have been slated for release in the New York session.
From Canada, the unemployment report for March, international merchandise trade and new housing price index for February are also due out.
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