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Australian Dollar, Labour Market Data, Talking Points

  • Australian employment levels overall beat forecasts for April
  • Full-time positions grew strongly while part-time ones shrank
  • Still, Aussie rates aren’t forecast to move for many months yet

Find out what retail foreign exchange traders make of the Australian Dollar’s prospects right now at the DailyFX Sentiment Page

The Australian Dollar didn’t get much juice out of a fairly perky set of official employment data released on Thursday.

The domestic economy added 22,600 jobs in April, nicely above the 26,000 rise predicted. Much of the surge was in the full-time jobs Aussie bulls usually like to see, too. Fully 32,700 of those were created, contrasting with a fall of 10,000 in part-time employment.

The unemployment rate crept up, admittedly, to 5.6% from 5.5% but the participation rate rose too, to 65.5%, from 65.5%. Indeed, the ‘trend’ participation rate hit a new record high of 67.5%.

Still, AUD/USD failed to react as it might have.

AUD/USD 5 Minutes Chart

The problem for Aussie Dollar bulls is that strong employment growth –of which these data are only another installment- doesn’t seem to be feeding through meaningfully into higher wage settlements which might give torpid inflation a good nudge upward.

In short, there’s little knock-on effect on interest rate expectations from even quite-strong numbers like these.

AUD/USD remains firmly stuck in a long-dominant downtrend on its daily chart, of which it is testing the lower reaches. The Australian Dollar has been a notable victim of broad US Dollar strength. This seems natural enough. The US Federal Reserve is still apparently keen to raise interest rates at least twice this year, while the Reserve Bank of Australia grapples with stubbornly low inflation which is likely to keep its Official Cash Rate at record lows until well into 2019.

AUD/USD has been range trading within its downtrend but seems to have suffered another failure at the range top. This puts focus on the base, which comes in at 0.7410,

Australian Dollar Still Stuck Despite Strong Employment Data

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

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