[Dan]

More unexpectedly strong data: Australia's employment grew by 27,300 jobs in April against market expectations for a 25,000 fall. The unemployment rate dropped to 5.4% in April (market: 5.9%). And retail sales also surprised: growing by 1% in Q1 in real terms. However, a large part of the strength in retail sales may be due to one-off government grants to low-income households and the increase in the grant to first-time homebuyers. These effects will wear off in the coming months. Therefore, we continue to believe the trend in the unemployment rate is up, but today's data slows this trend and suggests that the RBA is likely to be on hold for the next two to three months, though we still expect further RBA rate cuts thereafter. However, these data are clearly a big upside surprise .