Australian Dollar, AUD/USD, US Dollar, Unemployment, NZD/USD – Talking Points
- The Australian Dollar skipped a beat on robust jobs figures
- The US Dollar still dominates AUD/USD proceedings for now
- The RBA’s dovish tilt might be warranted by external factors
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The Australian Dollar nudged higher after jobs data came in above forecasts to match the lowest unemployment rate since the 1970s.
The unemployment rate dipped to 3.5% in February against the 3.6% anticipated and 3.7% prior. 64.6k Australian jobs were added in the month, which was above the 50k anticipated and -10.9k previously.
The tick-up in AUD/USD comes after a whippy week in the face of evolving turmoil across global markets. The price action has reflected the gyrations seen in the US Dollar after the collapse of three US regional banks and now the pressure emerging on Republic Bank and Credit Suisse.
The renewed tightness in the labour market comes after the RBA took their foot off the pedal in their inflation fight by taking a dovish tilt earlier this month.
The interest rate market is leaning toward no change in the official cash rate next month. If that occurs, it will be the first time since April last year that the bank has not hiked rates at its monthly monetary policy meeting.
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How to Trade AUD/USD
Given the current situation in global markets, it appears as though there will a lot of water passing under the bridge before the next meeting. There remains a significant degree of uncertainty surrounding the ramifications of the failure of the US banks
Although the Australian economy is running hot, the broader implications of tightening global financial conditions for risk assets would seem likely to impact the Aussie at some stage.
Across the Tasman Sea earlier today, New Zealand GDP came in lower than anticipated and opens the probability of the island nation going into recession. Fourth quarter GDP was -0.6% quarter-on-quarter rather than -0.2% forecast and 2% prior. The year-on-year read was 2.2%, well below the 3.3% anticipated and 6.4% previously. This saw NZD/USD drop half a cent, but it recovered much of this in the aftermath. The Kiwi may have been aided by Fonterra, New Zealand’s largest company, announcing a 50% lift in profits from this time last year.
AUD/USD TECHNICAL ANALYSIS
AUD/USD closed outside the lower band of the 21-day Simple Moving Average (SMA) based Bollinger Band last week before closing back inside it to set up a rally toward this week’s peak of 0.6717.
That high might provide resistance ahead of the previous peaks and breakpoints of 0.6784, 0.6856 and 0.6916.
The price is currently below all period SMAs and this may suggest that bearish momentum might unfold. With the exception of the 100-day SMA, all SMAs have a negative gradient. Should the slope 100-day SMA turn negative, it could confirm emerging bearishness.
Supprt on the downside could be at the prior lows and breakpoints of 0.6565, 0.6548, 0.6387, 0.6272 and 0.6170.
— Written by Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @DanMcCathyFX on Twitter