AUDUSD does what it should have done after employment data
Employment data was mixed but employment rate moves higher
The Australian employment data was "mixed" with higher job gains but a higher unemployment rate as well. Eamonn in his wrap at the end of the Asian session commented:
Technically, I outlined levels going into the release (see post: "Australian employment data to be released in the new day"). This was the chart posted outlining the key levels.
OK, back to AUD. The employment report was a mixed one, but my take on it is it supports those expecting further rate cuts from the RBA. While the headline jobs gain was a big beat, the headline unemployment rate was a miss. And its unemployment the RBA wants to see fall (to circa 4.5%) to fuel a pick up in inflation and economic growth. Buried in the data was an observation that'll sit heavily on the board room table at the next RBA monetary policy meeting - 'trend'' unemployment was up for the third consecutive month. Add in these two snippets also:
- the underemployment rate appears to be trending higher
None of this went unnoticed, market pricing for a July rate cut moved above 75%. By August a cut would appear to be a lock. AUD/USD is lower on the session, continuing its slow slide.
- average hours worked declined slightly to continue its long trend lower
This is the current chart:
Not surprising the price action did what it was supposed to do. The pair ran up from the 61.8% retracement level to the 100 bar MA on the 4-hour chart (at 0.6938 at the time). The price fell below the 611.8% retracement at 0.69243 and retested that level, before moving to the target support area at the 0.69968 to 0.69046 area. Profit takers have stalled the fall at the risk defining level.
The bears are more in control, but the support level at 0.6996-0.6904 (yellow area) needs to be busted to extend toward the other targets at the May swing levels (with key support at 0.6864).
Drilling to the 5 minuted chart, the recent corrective price action has been able to stay below the 200 bar MA (green line in chart below). That keeps the bears in charge intraday. The corrective price has also stalled near the 38.2% of the move down today.
That is a plain vanilla correction. The sellers remain in control. It will take a move above the 200 bar MA and then the 38.2% (and 50% of the day's range) to change the intaday bias. Stay above could lead to more short covering.