Australia’s jobless rate unexpectedly rose bringing rate cuts back on the table
20 February

Australia’s jobless rate unexpectedly rose bringing rate cuts back on the table

 

The AUD took a hit after Australia’s jobless rate unexpectedly rose, with fewer jobs added month on month, despite a surge in full-time employment and increased participation rate. The bushfires and its hit to tourism might have been one of the causes, as well as the closure of several retail chain stores across the nation. The RBA indicated previously that employment numbers will be key for any further rate cuts, and that it will continue to assess the economic outlook. Hence, with the labour market starting 2020 on a weak note, it once again ignited worries that the downbeat labour numbers could cause the RBA to reconsider their initial hawkish view and optimistic economic forecast. In addition, it is noted that the current labour numbers do not reflect the current Covid-19 situation, where lowered Chinese demand was observed, and weakness expected in Australia’s manufacturing and export sectors. Yet, the weakness in labour numbers may not be sufficient for the RBA to safely say that another rate cut is required to support the Australian economy.

 

The USD continued its surge against a basket of currencies this morning, as it drew support from strong US data, and the Fed’s latest minutes that showed optimism towards the US economy. Despite risks caused by the coronavirus outbreak, Fed officials largely remain confident towards there being limited impact on the US economy and that optimism will return to the economy once the Covid-19 situation passes. Hence, rates in the US are expected to hold for at least another three to six months.

 

 · On a technical perspective, the trend is bearish, with prices below the 20, 40, 100 and 200 EMA.

· Prices failed to break above the 20 EMA and retraced. This indicates that selling pressure is present.

· Based on the pivot point analysis, prices are below the pivot level. This signifies bearishness.

 

Resistance: R1: 0.67003, R2: 0.6245, R3: 0.67663

Support:     S1: 0.66585, S2: 0.66409, S3: 0.65991

 

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