Australian Employment Misses and Weighs Upon Aussie Dollar
- Employment Change figures better than anticipated
- Not enough to turn the market around
- Unemployment rate ticks up
Early during the Thursday session, the Australians released their employment figures in both the Employment Change variety and the all-important Unemployment Rate figures.
The market is watching Australia with a lot of interest as it is so highly correlated to the Chinese economy, which is under the microscope right now. Because of this, the market was reactive to the employment figures, especially considering that the numbers were a bit mixed.
Employment figures came out better than expected
The Employment Change figures came out at 13,500 added for the month, which was better than the 10,000 expected. The previous month was revised slightly from 28,900 to a reading of 28,700.
The Unemployment Rate came out at 5.3%. This was higher than anticipated, as the headline number was supposed to be 5.2% for the month.
Ultimately, the Australian economy is hanging on by its fingernails, and therefore these employment figures will do nothing to bring bullish attitude to the Australian dollar.
Furthermore, the People’s Bank of China also did an interest-rate cut overnight, and as a proxy for the Chinese economy, the Australian dollar took it on the chin. It now looks as if the market is ready to make its next move lower, perhaps down to the 0.63 level underneath. The reason for that is the fact that the market just entered the consolidation area from the financial crisis well over a decade ago. In other words, it’s a very low level and, eventually, somebody is going to step in and try to pick this market up.
However, there are plenty of reasons to think that we are going to be waiting for that for a while. After all, the coronavirus is still a major issue in China, and of course, the slowing down of the Chinese economy is known.
Still, the markets are forward-looking; as soon as they see some type of hope, the Australian dollar will rally.
Going forward, the market could turn around. But the first thing that should be said about this currency pair is that it probably becomes a “buy-and-hold” scenario, and therefore could be a move that is made for several years. Global growth needs to pick up though, and it’s very unlikely to push this market quite yet.
The plan is to look at the weekly charts and find some type of hammer, or perhaps an engulfing candlestick, that turns the market back around to the upside. Until then, it’s likely to go drifting towards the 0.63 level over the next couple of weeks.
The Australian dollar will offer value as soon as the situation in China picks up.