AUD/USD - Aussie Shrugs Off Dismal Australian Job Numbers

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Includes: FXA, UDN, UUP
by: Dean Popplewell

By Kenny Fisher

The Australian dollar is showing limited movement on Thursday, as AUD/USD trades at 0.7170 in the European session. In economic news, Australian Employment Change declined by 7.9 thousand, while the Unemployment Rate climbed to 6.0%. In the US, there are two key indicators on the schedule – the Philly Fed Manufacturing Index and Unemployment Claims. On Friday, the US will publish CPI, the most important inflation indicator. The markets are expecting a weak reading of -0.1%.

Australian employment numbers were soft, but the Aussie shrugged off the negative news. Employment Change dropped 7.9 thousand, marking a second straight decline. This weak figure surprised the markets, which had forecast a gain of 12.9 thousand. The unemployment rate followed suit, climbing to an even 6.0%. This figure was considerably higher than the estimate of 5.8%. Earlier in the week, the RBA released the minutes of its previous meeting. The minutes reiterated the central bank’s view that the Australian economy has shown modest improvement, but concerns remain over the strength of the Chinese economy, which has softened in 2016. The RBA continues to maintain an easing bias and has repeatedly said that it is prepared to cut rates from the current level of 2.00% if necessary.

All eyes were on the Federal Reserve on Wednesday, in anticipation of the release of the minutes of its January policy meeting. At that meeting, the Fed held rates at 0.25%, after raising rates in December for the first time in almost 10 years. The minutes reiterated the central bank’s concern that turmoil in global markets could have negative repercussions for the US economy.

Policymakers sent out a broad hint that a rate hike is unlikely in March, as they discussed “altering their earlier views of the appropriate path for the target range for the federal funds rate.” This could have a negative impact on the US dollar, as investors may look elsewhere to park funds if US rates are not moving higher anytime soon. Federal Reserve chair Janet Yellen said last week that the Fed still planned to raise rates later in 2016, and this was reiterated on Wednesday by FOMC member Neel Kashkari, who said that a March rate hike was on the table, provided that the economy improved and inflation firmed.

Still, a growing number of market players are skeptical that the Fed will make any moves before next year. Back in the heady days of December, the Fed hinted at a series of rate hikes during 2016, but the turmoil in the financial markets and the downturn in the US economy in 2016 has quickly dampened expectations of a rate move.

AUD/USD Fundamentals
Thursday (Feb. 18)
  • 8:30 US Philly Fed Manufacturing Index. Estimate -2.9 points
  • 8:30 US Unemployment Claims. Estimate 275K
  • 10:00 US CB Leading Index. Estimate -0.1%
  • 10:30 US Natural Gas Storage. Estimate -154B
  • 11:00 US Crude Oil Inventories. Estimate 3.2M
  • 19:30 Australian Employment Change. Estimate 12.9K. Actual -7.9K
  • 19:30 Australian Unemployment Rate. Estimate 5.8%. Actual 6.0%
Upcoming Key Events
Friday (Feb. 19)
  • 8:30 US CPI. Estimate -0.1%
  • 8:30 US Core CPI. Estimate +0.2%
*Key releases are highlighted in bold
*All release times are EST
AUD/USD for Thursday, February 18, 2016
AUD/USD February 18 at 8:50 EST
AUD/USD Open: 0.7174 Low: 0.7134 High: 0.7182 Close: 0.7157
AUD/USD Technical
S3 S2 S1 R1 R2 R3
0.6931 0.7012 0.7100 0.7213 0.7385 0.7440
Click to enlarge
  • The pair has been marked by choppy trading in the Asian and European sessions.
  • 0.7100 is providing support.
  • There is resistance at 0.7213. This is a weak line.
  • Current range: 0.7100 to 0.7213
Further levels in both directions:
  • Below: 0.7100, 0.7012, 0.6931 and 0.6848
  • Above: 0.7213, 0.7385 and 0.7440
OANDA’s Open Positions Ratio
AUD/USD ratio is showing little movement, consistent with the lack of movement from AUD/USD. The ratio remains close to an even split between long and short positions. This indicates a lack of trader bias as to what direction the pair will take next.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.