ASIA MORNING: Aussie, Aussie, Aussie; Jobs, Jobs, Jobs

Markets appear undecided in terms of what the RBA might do in its early November meeting. The implied probability of a 25bps rate cut currently sits just under 40% with the rest of the 60% attributed to a hold. The all-important Aussie jobs report and how it prints today at 11.30am AEDT could see November expectations for a rate cut rapidly rise like they did in August, if we fail to clear the bar again. A moderate 15k increase is the amount of jobs expected to be added in September. We however pay considerably close attention to how its underlying drivers in full-time and part-time jobs print in determining the state of the Aussie labour market. 
 

A headline beat driven by a strong amount of FT jobs should see a bullish move for AUDUSD as bets for a Nov. hold by the RBA strengthen. We note that the RBA might not be rushed to cut if jobs hold up. Instead, preferring to see and allowing time for the previous three rate cuts to work their way through the economy. 

Conversely, a headline beat driven by PT jobs or a headline miss paints a negative picture for the labour market and drives AUDUSD lower, as bets strengthen for a Nov. cut. The RBA's ultra lower-for-longer stance and preparedness to ease monetary policy further allows for another cut. The RBA will also want to keep the Aussie dollar weak as it's supporting growth. Meaning if the Fed cut, the RBA are likely to follow suit. The chances for a Fed cut in October edged higher overnight on weak US Retail Sales (-0.3% vs 0.3% expected).

Elsewhere, we expect some AUDUSD interest in the Address by Deputy RBA Governor, Guy Debelle, at a CFA conference held in Sydney due for release at 9.15am AEDT. 
 

Risk sentiment in NY capped gains with disappointment in US Retail Sales, -0.3% vs 0.3% expected, driving a weaker USD against G10 majors. This comes off the back of yesterday's confrontational announcement that the US House of Reps approved a Hong Kong Human Rights and Democracy Act. The piece of legislation paves the way for sanctions against those that undermine Hong Kong's autonomy. While it still needs to get through the Senate and can be vetoed by Trump, it's another thorn in the side of US/China relations and could very well impact trade negotiations especially since China regards this as interference in their domestic affairs. Furthermore, China looking for tariffs to be rolled back before it ramps up US$40-50bn worth of US agricultural purchases remains a sticking point. 

ASX Futures were lower overnight -0.21% and should see ASX 200 open a touch lower. As reporting season gets underway in Australia, we see this as a stronger driver of ASX moves in the near-term with broader developments in US/China trade tensions serving as a risk sentiment backdrop. 


ASX200 Daily. Source: ThinkMarkets