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AUD/USD, Australia Jobs Report Talking Points

  • Australian Dollar falls after lackluster jobs data fueled RBA rate cut bets
  • Unemployment unexpectedly held at 5.2%, less-desirable job gains seen
  • AUDUSD appears to be reversing near-term uptrend, eyeing May lows

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The Australian Dollar came under selling pressure as the latest local jobs report resulted in lackluster outcomes. In May, Australia’s unemployment rate held steady at 5.2%, economists were calling for a downtick to 5.1%. While the nation added more jobs (42.3k versus 16.0k expected), most of those gains were derived from part-time positions (39.8k). More desirable full-time additions only clocked in at 2.4k.

On the upside, Australia’s labor force participation rate ticked higher unexpectedly from 65.9% in April to 66.0% which is a record high. Forecasts were calling for a decrease to 65.8%. This suggests that perhaps unemployment held for the right reasons. Still, Australian front-end government bond yields declined, hinting rising bets of another RBA rate cut so soon. In June, the central bank noted the importance of labor data in driving their outlook.

Ahead, AUDUSD has external data waiting for it at the end of this week. On Friday, both the US and China will release retail sales statistics for May. Last week, the Greenback suffered as Fed rate cut bets surged. This could be compounded by more disappointing data, offering the Aussie a chance to capitalize on any weakness. China meanwhile is Australia’s largest trading partner, where economic outcomes can impact domestic activity.

Australia Unemployment Versus Labor Force Participation

AUDUSD at Risk, Australia Jobs Data Underpins Another RBA Rate Cut

AUD/USD Technical Analysis

On a daily chart, AUDUSD appears to be reversing the near-term uptrend that carried it to last Friday’s peak around 0.7012. Prior to the jobs report, the 4-hour chart hinted of a downturn after clearing a rising trend line from late May. As such, we could be looking at another retest of 0.6865 ahead. If that is taken out, January 2016 lows at 0.6827 would be exposed. You can follow me on Twitter for the latest updates in AUD here at @ddubrovskyFX.

AUD/USD Daily Chart

AUDUSD at Risk, Australia Jobs Data Underpins Another RBA Rate Cut

Chart Created in TradingView

Australian Dollar Trading Resources

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

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter