Australian employment shocked the market with yet another stunning gain yesterday. Australia generated 61K new jobs versus 19K eyed as the unemployment rate remained steady at 5.4% while participation rate climbed to 65.5% from 65.1% the month prior. The news caps an incredibly strong year for jobs in the Australian economy which saw employment expand at 3.2% pace in 2017. Furthermore fully 80% of the jobs have been full-time jobs suggesting that broader GDP growth should remain sound for the foreseeable future.

Over the past few months, the Australian economy has been dogged by weak Retail Sales, muted inflation, and sagging housing prices all of which have weighed on demand and have kept the RBA firmly in neutral territory. But the solid pace of job growth stands as a strong counterpoint to the recent soft data and should translate into better demand into the start of 2018.

At the same time, US data is also showing strong gains as US Retail Sale blew past expectations today rising 1%. Although that has not translated into strength in USDJPY just yet, the market will have to respond sooner rather than later especially if US data continues to improve. That puts AUDJPY on pace to target 87.00 over the next several days.