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Australian Dollar Could Still Rise Despite Drop on Jobs Report

Australian Dollar Could Still Rise Despite Drop on Jobs Report

Daniel Dubrovsky, Strategist

Talking Points:

  • Australian Dollar depreciates on a disappointing local employment report
  • Either way, the RBA is still patient on rates. Focus turns to risk trends next
  • AUD/USD could be at risk of climbing due to a bullish formation on the daily

Find out what retail traders’ Australian Dollar buy and sell decisions say about the coming price trend!

The Australian Dollar declined more than 0.2% against its US counterpart after a worse-than-expected local jobs report. However, AUD/USD could still rise in the aftermath. In March, Australia only added about 4.9k employees versus 20.0k estimated. This is an improvement to last month’s decrease of 6.3k (originally a 17.5k gain). Meanwhile, the unemployment rate stayed the same at 5.5%.

Looking at the details of the release. The country shed roughly 19.9k full-time workers which is a significant change from February’s 64.9k gain. January 2017 was the last time Australia lost more full-time workers than that, so it’s been more than a year. Meanwhile, the country added 24.8k part-time positions. The labor force participation rate continues to fall from January’s record high of 65.7%. Now, it stands at 65.5% which was less than expectations of 65.7%.

When comparing today’s labor data to the Reserve Bank of Australia’s outlook, it seems to fall a bit short. According to the RBA, their forward-looking indicators point to solid growth in employment. When also taking into account the central bank’s patient stance on rates, it makes for an argument that they really aren’t going anywhere on them any time soon. Indeed, local 2-year government bond yields fell alongside the Australian Dollar. This shows ebbing hawkish RBA monetary policy expectations.

With that in mind, and like the New Zealand Dollar, the Aussie will probably turn its attention to risk trends. One such catalyst for this could be ongoing commentary from Fed officials. Lael Brainard, a member of the Board of Governors, will present a speech later today at 12:00 GMT. Then Loretta Mester, who is the President of the Cleveland Fed, will talk about the economic outlook. If hawkish commentary sparks more US Dollar buying, then the Australian Dollar could yet fall some more. However, technicals paint a different picture.

Australian Dollar Could Still Rise Despite Drop on Jobs Report

AUD/USD Technical Analysis: Trying to Push Higher?

On a daily chart, AUD/USD has pushed above the upper line of a falling wedge bullish reversal pattern. This opens the door for the pair to make further progress to the upside. From here, near-term resistance is the 38.2% Fibonacci retracement at 0.7831. A push above that exposes the 50% midpoint at 0.7889. On the other hand, immediate support is at 0.7759 which is the 23.6% level. A break below that exposes the upper line of the falling wedge. Eventually, AUD/USD could find itself facing the rising trend line from January 2016.

Australian Dollar Could Still Rise Despite Drop on Jobs Report

AUD/USD Trading Resources:

--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

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