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Australian Dollar Market Looks Nervously to Corvid-Hit Jobless Numbers

Australian Dollar Market Looks Nervously to Corvid-Hit Jobless Numbers

David Cottle, Analyst

Fundamental Australian Dollar Forecast: Bearish

  • AUD/USD has clawed back some of its contagion-inspired losses
  • However this week brings scant local economic news
  • What there is won’t be very comforting

The Australian Dollar faces a week of very limited domestic economic data, therefore it’s all-too-likely to remain at the mercy of overall global risk appetite. These days means that coronavirus headlines will be in charge.

The numbers cupboard isn’t entirely bare. The Reserve Bank of Australia won’t be heard from after last week’s decision to leave interest rates alone for May. The Key Official Cash Rate remained at 0.25%, and seems likely to stay there for an extended period.

The coming week will see snapshots of business and consumer confidence fall due. The most important release will be April’s official employment statistics. They’re coming up on Thursday.

The March figures looked surprisingly resilient to the contagion which had seen joblessness soar elsewhere. However, the survey period missed the imposition of various economic shutdowns which are very likely to show up in the coming figures.

That said the Australian Dollar market should be braced for bad news. The treasury said on April 14 that the jobless rate is expected to nearly double in the year’s first half, to 10% from the current 5.1% level. Meanwhile the RBA’s baseline expectation is that Gross Domestic Product will fall by 10% in the first half of the year, and by 6% for 2020 as a whole.

Growth correlated assets such as the Aussie have seen strong gains since March thanks to massive monetary and fiscal action across developed and emerging economies aimed at warding off the coronavirus’ worst economic effects. The prospect of gradual emergence from lockdown has also been supportive.

However, the question now is how resilient these assets will prove to the awful figures still left in the pipeline, of which the upcoming Australian labor market report is likely to be a clear exemplar.

While overall market risk appetite is extremely hard to gauge, terribly weak data are unlikely to see the bulls out in durable force. Therefore it’s a cautiously bearish call again for the Australian Dollar.

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Australian Dollar Resources for Traders

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--- Written by David Cottle, DailyFX Research

Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.