Australian Dollar Gains As Jobless Rate Falls Below 5%
Australian Dollar, Official Employment Data, Talking Points:
- Unemployment slipped below 5% in February, quite a breakthrough
- However, job creation overall was much slower than expected, with full time roles falling
- AUD/USD gained, presumably on the rate news, but there are clouds in this data
Join our analysts for live, interactive coverage of all major economic data at the DailyFX Webinars. We’d love to have you along.
The Australian Dollar gained sharply Thursday on news that the unemployment rate had fallen below 5% in February.
This is a feat not achieved by the Australian economy since 2011, since when 5% has looked like something of a natural floor. News that it isn’t after all boosted the currency despite news of sharply weaker job creation during the same month.
4,600 new jobs were added to the roster, well below the 15,000 expected and January’s blockbuster 38,300 rise. More worryingly still, full-time employment slipped by 7,300, while 11,900 Australians found part-time work. The overall participation rate edged down too, to 65.5% when 65.7% had been hoped for.
Overall this is a rather mixed bag of data, but it comes after a very strong previous month and it’s too soon to say that anything is terribly wrong with Australia’s long-formidable job-creation machine. Still, AUD/USD investors obviously clung to that employment rate fall.
On its daily chart, AUD/USD remains well within the long downtrend seen since the start of last year, as Australian interest rates remained stuck at record lows while the US Federal Reserve continued to raise its own.
However, now of course the Fed itself is far more cautious, with Wednesday’s policy statement suggesting that only one more rate rise could come before the end of 2020. This prognosis has lifted many currencies against the US Dollar, and the Aussie is no exception.
The Australian currency could also benefit strongly in the event of a trade settlement between the US and China. However, the Australian economy endures resolutely weak inflation, and domestic interest rates may yet head lower, as the Reserve Bank of Australia has recently admitted. Given that it’s hard to see a conclusive, long-term downtrend break even if general US Dollar weakness pushes AUD/USD higher in the short term.
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!
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.