Market News & Analysis


Top Story

AU employment reignites AUDUSD downside

A remarkable session for markets overnight as one of the most established relationships in trading appeared to completely sever ties with its past. The ability of gold and USDJPY to rally in tandem is an occurrence which until recent times has rarely been seen and is yet another example of how the world of low/negative interest rate world, is altering investment decisions.

On the subject of low-interest rates, today's Australian Labour force report for January, coming after another round of stagnant wages data earlier this week is set to test the resolve of the RBAs optimism that has been on show in recent months.

This optimism has been in large part due to the better run of employment data during the last two months of 2019 which saw the unemployment rate fall from 5.3% to 5.1%. Today's release reverses that fall in one neat brushstroke as the unemployment rate returned to 5.3% and the underemployment rate rose from 8.3% to 8.6%.

The bright spots were a +46k rise in full-time workers after three months of subpar gains in this category and the participation rate ticked higher to 66.1%, just below the record high of 66.2% achieved midway through 2019.

Today's report has, in a nutshell, lowered the bar to another RBA interest rate cut which may come as soon as April should the February Labour force report due to be released on March the 19th disappoints in a similar fashion.

The impact of this has resulted in the AUDUSD breaking below key support .6670/60 area, after gallantly fighting for two weeks against the tidal wave of U.S. dollar buying seen in other currency pairs. The latest leg lower is viewed as a minor Wave v from the .7032 high of late December.

The commonly used projection for a Wave v is based on the length of Wave i (the decline from .7032 to .6849) and this implies the current leg lower can extend towards .6570ish, however in the current environment where the U.S. dollar reigns supreme some downside overshoot cannot be ruled out.

AU employment reignites AUDUSD downside

Source Tradingview. The figures stated areas of the 20th of February 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.