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Analysis

Poor Job Market Data Weigh on AUDUSD

BY Janne Muta

|August 17, 2023

AUDUSD trades lower again today after the release of disappointing employment numbers (-14.6K, 14.6K expected, 31.6K prior). The market is additionally pressured by the strength in the US economy and China’s economic slowdown. China is Australia's largest trading partner with around 32% of Australia's total exports going to China.

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AUDUSD Daily chart

AUDUSD, Daily Chart

At the time of writing this the market has been trading lower for seven consecutive days and the market is reacting to the lower end of a wide bearish price channel. The nearest daily resistance level is at 0.6502.

AUDUSD 4h chart

AUDUSD, 4h Chart

On top of the market trading at a long term channel low the four-hour chart shows how the current market price is relatively far away from the 20 period SMA and the Stochastics are in the oversold territory. This allows room for the market bounce higher should there be a short-squeeze. Note, however, that the area above the short term channel high contains multiple resistance levels. Unless the bulls can't show strength inside this area (0.6458 - 0.6521) the market has more downside ahead. Above 0.6521, the market could trade to 0.6600. Below the current market price the nearest major support level is at 0.6170.

Client Sentiment chart

TIOmarkets Client Sentiment

TIOmarkets client sentiment on AUDUSD is strongly bullish with 95% of traders betting the market will rise. Note that the retail trader client sentiment is a contrarian indicator as most of the retail traders are on average are betting against the market trend. Therefore, more experienced traders tend to trade against the retail client sentiment. You can follow the TIOmarkets client sentiment live on our Forex dashboard.

GBPAUD chart

GBPAUD, 2h Chart

Currently GBP is the strongest currency among the major dollar counterparts and the AUD is the weakest. This shows in the GBPAUD 2h chart as a strong upmove. The market is extended to the upside in the 2h timeframe. The nearest support level is at 1.9738. A possible retracement to the level could attract buyers to the market. Below the level, the market might trade down to 1.9620.

Unexpected Rise in Australian Unemployment

In July, Australia's unemployment rate increased marginally from 3.5% to 3.7%, slightly surpassing market expectations. This escalation reflects the highest unemployment since April. The labour market displayed some concerning trends: while the total unemployed grew to 541K due to both full-time and part-time job seekers, there was an unanticipated drop in employment by 14.6 thousand to 14.03 million. Notably, full-time roles decreased more significantly than part-time and the labour force participation rate edged down to 66.7%, subtly below expectations.

FOMC Minutes: Potential for Monetary Policy Tightening

The FOMC minutes from the latest Fed meeting show how many participants still perceived substantial upward risks to inflation, potentially necessitating further monetary policy tightening. This created further pressure on the AUDUSD pair. At the same time though, there were concerns among some about the economic implications of excessively high rates. The Fed officials concurred that there was prevailing uncertainty, emphasizing that upcoming rate decisions would be influenced by new data that would shed light on the ongoing disinflation trends.

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The Next Main Risk Events

  • USD - Unemployment Claims
  • USD - Philly Fed Manufacturing Index
  • GBP - Retail Sales

For more information and details see the TIOmarkets economic calendar.


Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets.com

While research has been undertaken to compile the above content, it remains an informational and educational piece only. None of the content provided constitutes any form of investment advice.

DISCLAIMER: Tio Markets offers an exclusively execution-only service. The views expressed are for information purposes only. None of the content provided constitutes any form of investment advice. The comments are made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances, or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval.

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Janne Muta

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.

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