The Australian Bureau of Statistics released jobs data for June. There were 15.9K jobs added, compared to a loss of 5.1K jobs in May. Forecasts called for a 12.3K reading for June. Although the headline numbers look strong, the details tell a different story.
The increase in jobs was led by gains in part-time employment, while full-time employment actually fell. The unemployment rate also rose, but the good news is that more people are looking for jobs. This pushed the unemployment rate to 6.0% from 5.9%. All in all, the jobs report was mixed, and should not be considered a bullish factor for AUD.
AUD/USD Fails a Bullish Continuation Attempt:
What can we assess from AUD/USD’s reaction to the Australian jobs data?
– The AUD/USD had a whiplash reaction, with an initial bullish reaction quickly reversed. The 4H chart shows AUD/USD pop up above a common resistance level at 0.9440. Traders quickly sold off the AUD, and the pair fell to 0.94.
– The reaction shows the importance of this 0.9440 level. If the AUD/USD is to continue its prevailing bullish trend, it will have to round out this week closing above 0.9440.
– To the downside, 0.9380 will be important. A break below this support/pivot level will suggest a bearish outlook, at least to test the 0.9320-0.9340 lows, below which, the 0.92 would be in sight.
FOMC: The FOMC meeting minutes revealed the intention to completely end QE by Oct. 2014. Market participants did not see any hints of next year’s rate hike to be past the middle of the year. This can be considered a relatively hawkish tone considering the worrisome Q1 GDP reading (annualized -2.9%).
Traders however remained bearish on USD after the FOMC minutes, at least fo rthe time being. The soft USD kept the AUD/USD buoyed. Without any clear fundamental signals, we should focus on the 0.9440 and 0.9380 levels for direction. North of 0.9440 is bullish, and south of 0.9380 is bearish.
AUD/NZD Threatens Bearish Continuation:
The AUD/NZD’s reaction after the jobs data shows that NZD is dominant as the pair knocking at its 2014-consolidation channel support.
– After the jobs data, the AUD/NZD extended a bearish swing since June’s high of 1.1035 to the April and May low around 1.0650.
– When you look at the daily chart, you see the pair pressing on the 2014-consolidation channel support.
– The RSI is clearing below 40, which shows loss of the bullish momentum established by the rally in May.
– The prevailing trend before 2014 was bearish, so a break below 1.0650 could open up a bearish continuation, first toward the 2014-lows around 1.05.
– If the bearish continuation does develop, the next support below 1.05 is 1.0426, the 2006-low, so there is not much room before AUD/NZD will be faced with major support.
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