According to Sean Callow, analyst at Westpac, the kneejerk market response was to focus on the rise in unemployment, with AUD/USD dipping below 0.6900 and market pricing for a June rate cut jumping from 40% to 60%.

“AUD/USD trimmed its losses to a very modest fall but will remain fragile near term. Rate cut expectations were reinforced by a worrying slide in the employment index of the Apr NAB business survey and another quarter of sluggish wages growth. This weekend’s Australian federal election adds to the uncertain outlook. While the local data calendar goes quiet, A$ traders will still have to negotiate a keynote speech by RBA governor Lowe and no doubt daily headlines on US-China trade tensions. Given the domestic headwinds and prospect of no US-China trade breakthrough until at least the end-June G20 meeting, the risks on AUD/USD are skewed clearly to the downside.”