Bears have a better technical toehold on AUDUSD today after last night’s very ugly employment report reminds the market of the shaky status of the Australian economy.
Australia’s May jobs data saw a sudden spike in payrolls that appeared to challenge the evidence that the Australian job market was tipping into a steep declin, but this merely proved another of the data spikes that plagues the history of the data series and June data was almost precisely as bad (-33.5k) as May was good (+36.4 – revised down from 46.1k). This finally cooled the Aussie rally, which was growing remarkably stretched virtually across the entire swath of the rest of the G-10 currencies.
The poor Australian employment data also came just after the FOMC minutes provided little to boost already sky-high expectations of imminent Fed easing. The pronounced reversal in Aussie pairs may reinvigorate the bears here, and a number of other fundamental indicators (risk appetite, rate spreads, metals prices) are pointing south for the currency.
Chart: AUDUSD
An almost engulfing bearish candlestick today just from yesterday’s retest of the 200-day moving average gives a fairly clear-cut technical case for the bears. The next big test is of parity if the pair can work its way down through the local support close to current levels (1.0150). The 55-day moving average also lurks down around there.
John J Hardy,
SAXO BANK