Market News & Analysis
AUDUSD begrudgingly lower after jobs report
Tony Sycamore May 14, 2020 12:30 PM
In recent sessions, the AUDUSD has been resilient, content to ignore a sell-off in its Antipodean counterpart, the NZDUSD yesterday. Content also to look through rising Australian - Chinese trade tensions. An article appeared overnight in the Global Times stating that unless Australia was to rethink its attitude towards China, Australia was “delusional to expect trade relations to remain on track.”
Further evidence of the currency’s resilience on display today following the release of the Australian labour force survey for April.
Heading into the data, Australian Taxation Office data showed that close to 1 million workers had lost their jobs. However, there was conjecture about how directly this would flow through into the official data given classification differences.
The actual fall in employment in April of -594k was very close to market expectations of a -575k fall. The big surprise was a “limited” rise in the unemployment rate from 5.2% to 6.2%, much better than the 8.2% expectation. A function of the participation rate falling to 63.5% from 65.3% and without this, the unemployment rate would have been 9.6%.
The takeaway from this, is the Governments JobKeeper wage subsidy program is working as designed. People are not looking for a job, as they anticipate they will go back to their previous job once the lockdown ends. This suggests the unemployment rate will fall below the 10% previously forecast, helping to explain the limited fall in the currency today.
Also helping to explain the technical backdrop. After completing a five-wave rally at the .6570 high, the view is a corrective pullback is underway in the AUDUSD. The target for the pullback is the .6370/50 support level, less than 1% below today’s .6421 low.
Effectively, the begrudging price action suggests the AUDUSD is not far away from a short term low and we are watching for signs of a base to form. Keeping in mind, that if the AUDUSD was to break the .6370/50 support area, it would warn that a deeper retracement back towards .6250 is underway.
Source Tradingview. The figures stated areas of the 14th of May 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
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.
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.