After last week’s losses against the Australian dollar, the pound had managed to find some footing since Monday in the high 1.70s on the interbank exchange. The clear catch point looked likely to be last night’s key employment data, which, in line with the long-term trend since 2017, managed to hold below the 5.5% at 5.2%.
Furthermore, average hourly pay rates rose by 0.6% in the second quarter, with a jump in public sector wages the main driver.
Naturally the markets responded well on the back of this. Given the current global trade tensions Australia’s main trade partner China is going through, the fear of a contraction from the economy remains.
Last night’s stability in the jobs market however reflected a certain level of resilience however which has the potential to provide further support to the dollar in the long run, particularly if subsequent releases follow suite. The net change in employment jumped by 41.1k in July, impressively surpassing the market’s 14k expectations.
Importantly, the Reserve bank of Australia’s minutes from this month’s interest rate decision will be released next Tuesday. In his Statement governor Phillip Low highlighted a worrying decline in housing prices and an expected period of low-income growth in the month’s ahead, which goes some way to contradict last night’s figures.
Australia’s dependency on its coal industry is well documented, with the mining sector alone contributing to around 8.5% of Australia’s GDP and nearly 2% of the country’s workforce.
This week however, Australia was heavily criticised by the other leaders of the pacific islands for the over exploitation of fossil fuels, resulting in detrimental effects to the environment.
Prime ministers of New Zealand, the Cook Islands, Vanuati and Tuvalu have all openly condemned Australia’s lack of commitment to the regions’ commitment to reduce emissions and have asked for the opening of new coalmines to be suspended.
Australia have announced a budget of $500m over the next five years to commit to sustainable energy efforts, but this has already been deemed insufficient. Further concessions here could well add another layer of economic uncertainty down under which could hold weight with the markets moving forward.
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