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Jobs data confirms RBA assessment of local economy

15.21 AEST, Thursday 9 August 2012

Jobs data confirms RBA assessment of local economy
By Ben Taylor (Sales Trader, CMC Markets)

After three days of solid gains the market seems to be slowly running out of steam. The better than expected Aussie job numbers helped to consolidate this week’s gains while our mining sectors recent underperformance gap is starting to be closed.

The only real beneficiary of today’s stronger than expected Australian jobs figures was the Aussie dollar which sent the risk currency skyward above 1.06. The jobs data confirms the RBA’s assessment of the Australian economy and suggests to me that no further rate cut will be evident before the end of the year unless European factors deteriorate more than expected.

As we now sit at the top end of the recent Aussie 200 range, I believe we will see a break above this range in the coming months as our miners play catch up to Australian bank out performance. Last night’s US treasury auction is a clear example of the smart money transition out of safety. The large percentage of bond holdings will unwind once central bank actions are confirmed and once that happens be prepared for an almighty rush into risk assets which are currently sitting under their historical averages.

The Chinese PPI and CPI numbers today provide further room for monetary policy easing and cuts to their RRR. Further stimulus in China will be supportive of higher commodity prices and give reasons to take a greater exposure in Australian miners.


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