Stronger Labour Market Continues to Boost Pound

Economic data continues to be on the Pound’s side, with another set of better-than-expected figures, this time from the labour market. The unemployment rate fell from 4.2% to 3.8% against expectations of 4.0%.

RBA Still Wants Reassurance

The RBA Board held rates steady today, as expected by almost everyone. It is still not ruling out a hike, but nor is it ruling out a cut once it achieves sufficient confidence that inflation will return to the 2–3% target range sustainably.

Bitcoin is Looking at Stocks, and That's Worrisome

Bitcoin is trading at $42.7K – virtually unchanged in 24 hours, just 1.4% lower than a week ago and a 1.8% decrease over 30 days. Don’t think that the first cryptocurrency has turned into a stablecoin, as December’s stabilisation after growth has been replaced by a January pendulum swing.

RBA's Hawkish Surprise Temporarily Boosted Aussie But Failed to Turn It Around

The Reserve Bank of Australia kept its cash rate unchanged at 4.35% for the third consecutive meeting. The markets widely expected the decision, but the tone of the accompanying commentary was more hawkish than the market had anticipated, adding to Aussie buying.

Australian Dollar Yawns as RBA Stands Pat

The RBA left interest rates unchanged at 4.35% at its first meeting of 2024. The central bank raised rates by a quarter-point in November but has been reluctant to lower rates, even with inflation continuing to decline. The decision was widely expected and the Australian dollar shrugged, gaining just 0.2% after the meeting.

NZD/USD Calm Ahead of NZ Job Data

New Zealand releases the fourth-quarter employment report later today. Employment is expected to rebound with a 0.3% gain, after a decline of 0.2% in the third quarter, which was the first decline in over three years. The unemployment rate is expected to rise to 4.2%, up from 3.9% in the third quarter.

Sunset Market Commentary

Core bonds, US Treasuries in particular, opened higher in an attempt to recoup some of the Powell-Payrolls-ISM triple whammy they suffered over the previous days. But US yields shedding between 0.1 and 3 bps across the curve is nothing compared to the 30bps+ they gained in just two trading days. Technically, the likes of the 2- and 10-year remain close to the (be it early) YtD (intraday) highs.

Is German Industry Ready for Revival?

Industrial orders rose 8.9% in December against expectations for a 0.1% decline, a rare positive for Germany that the euro chose to ignore. This is the most robust monthly increase since mid-2020’s lockdowns.

NZ First Impressions: Labour market statistics, Q4 2023

The December quarter labour market surveys surprised modestly to the upside, suggesting that activity and inflation pressures are still easing, but perhaps not as quickly as the RBNZ would have hoped.

German Factories Orders Get Boost from Major Airplane Orders

In Germany, factory orders for the month of December rose unexpectedly by 8.9% m/m compared to consensus expectations of -0.2%. The big jump was however largely due to some major orders related to airplane manufacturing. Looking past these orders, factory orders fell 2.2% m/m, which also appears more in line with German GDP shrinking 0.3% q/q in 2023Q4.