[AndrewWoo]

Australian employment fell close to expectations but the unemployment rate surprised modestly to the downside rising to 5.8% (cons: 5.9%). But we think that today's labour market data make little difference to the RBA's view and the AUD other than in the very short term. In the short run the AUD remains under pressure from two out of three of its key drivers - commodity prices and investor risk aversion. Also being long AUD has been the most popular position in G10 FX, so some of the weakness is likely related to an unwind of these positioning is also placing downward pressure on the AUD. We think there is potential for further short-term downside in the AUD. Over the next few months though, we remain AUD bulls - partly because we expect interest rates (the third driver) to remain relatively high.