Will Job Losses Force the RBA’s Hand on Rates: AUD/USD

A new report from three major financial institutions is suggesting that the Aussie economy could have more headwinds ahead, led by significant job losses.

The reports from AMP, KPMG and UBS all point to major job losses in both the retail sector and construction.

The reports point to 50,000 job losses in retail, while the further contraction in building and construction (which we saw with yesterday’s data), suggests that we could see a similar number of losses in the construction industry.

Both construction and retail are two of the main industries for jobs (in terms of volume) in Australia and represent entry-level opportunities for many.

Australia has just been through a once in a generation housing and construction boom and job losses are almost a given.

By a weak economy overall would likely lead to a sector like retail feeling the pinch.

The experts suggest that as job losses increase there will be more pressure on the RBA to cut rates twice this year. This is despite the RBA’s Lowe coming out and saying the employment is one of the strongest areas of the economy.

But as we know, the RBA is often a lagging indicator of what is actually going on.

Aussie Outlook

The AUD/USD couldn’t break the major level at 0.7200 and has sold off sharply.

0.7050 and then 0.7000 are my next two key support levels below, with 0.7100 key support.

0.7200 is R1 and 0.7300 is R2 and the most recent highs sitting at 0.7400.