CORRECTION: AUD Surges On Strong Jobs Data, Leaves Antipodean Cousin Behind

A combination of strong labour market data released out of Australia and a hawkish change to the rate-hike call of an influential RBA watcher bolstered the Australian dollar, which still comfortably outperforms all G10 peers. Buying was triggered by the December jobs report, which showed that the unemployment rate undershot the expected level (4.5%) and fell to a 13-year low of 4.2%. Employment growth was slightly faster than forecast, while the participation rate stayed at 66.1%. The data came with a caveat, as the ABS noted that the survey was taken "was prior to the high number of COVID cases associated with the Omicron variant," but was enough to fuel hawkish RBA bets.

• Before the release of Australian jobs report, Westpac's Bill Evans said that he now expects Australia's central bank to deliver the first cash rate hike this coming August, which will be followed by another hike in October. Evans had earlier forecast the cash rate not being raised until February 2023.
• Trans-Tasman flows pushed AUD/NZD to within touching distance from the NZ$1.0700 mark. BBG trader sources suggested that buy-stops were triggered above resistance from Jan 5 high of NZ$1.0651. The swing in AUD/NZD sapped strength from the broader kiwi dolar and the flightless bird landed at the bottom of the G10 pile.
• Spot USD/CNH ground lower with all eyes on the PBOC. China's central bank cut their 1-Year & 5-Year Loan Prime Rates, which came after reductions to 1-Year MLF & 7-Day Reverse Repo rates delivered earlier this week. Meanwhile, the USD/CNY reference level was set at the lowest point since May 2018, which some interpreted as a sign of the PBOC's sense of comfort with redback appreciation.
• The DXY moved in tandem with U.S. Tsy yields, as both retreated in early trade only to gradually recoup the bulk of their losses. The initial weakness in U.S. Tsy yields dragged USD/JPY lower, but the yen went offered later in the session. Worth noting that it is a Gotobi day in Japan, which may have contributed to eventual JPY weakness.
• U.S. weekly jobless claims, final EZ CPI, ECB Dec MonPol meeting minutes & Norges Bank MonPol decision take focus from here.