AUD Struggling to Rise after Modest Australian Jobs Data

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AUD Struggling to Rise after Modest Australian Jobs Data

Australia’s employment data showed that 42.7K new jobs were added to the economy in November. This beat forecasts of a 15.2K print. October’s reading however was revised down to 13.7K from the original print of 24.1K. Out of the new jobs added, only 1.8K were full-time posts. The improvement in November was therefore modest.
aus employment change

(click to enlarge; source: tradingeconomics.com)

Despite the stronger-than-expected job growth (fastest monthly reading since March 2012), the unemployment rate rose to 6.3%, which is the highest in 12-years.
unemployment rate aus

(click to enlarge; source: tradingeconomics.com)

Also, the participation rate edged higher to 64.7% from a 64.6% reading in June.

AUD/USD and AUD/NZD Reactions:

The AUD/USD rallied immediately after the jobs data, but found resistance at 0.8375. It is basically testing this week’s high, a falling speedline and the 50-period SMA in the 4H chart.

AUD/USD 4H Chart 12/11
AUD/USD 4H Chart 12/11
(click to enlarge)

The modest jobs growth should not be able to reverse the bearish trend, even though there is upside risk in the short-term to 0.8450 if the USD fades. If AUD/USD holds below 0.8375 and falls back below 0.83, we should be looking for a bearish continuation attempt to test the 0.8225 low and possibly the 0.82 handle.

Usually, a better read of AUD strength is against its neighbor’s NZD. But, in this case, we are seeing some NZD strength as well after the RBNZ statement, so unless the market believes the jobs data can make an impact on the RBA’s view on monetary policy, it could be swept by NZD-strength. There was no significant change in tone, except a note that the economy is growing just above the expected pace.

AUD/NZD 4H Chart 12/11
audnzd 4h chart 12/11
(click to enlarge)

The market put on NZD-strength, and AUD/NZD fell sharply below a consolidation support. It is now hovering above 1.06, and the jobs data does not seem to be giving the AUD any lift. If there is a pullback, we should look for resistance in the 1.0750-1.08 area. Below 1.06, there is downside risk towards the 2014-lows around 1.05.

Final Words:
The reaction in AUD/USD and AUD/NZD shows that the jobs data is not going to provide the boost. They are likely going to move on USD and NZD flow, which is relatively stronger at the moment.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.