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Shorting AUD/USD Again, After the US Employment and Earnings Reports

Posted Friday, June 4, 2021 by
Skerdian Meta • 2 min read

Is the jump over now?

The AUD/USD turned quite bearish on Wednesday, as the USD gained some strength over the economic data released by the US on the day. We had a sell Forex signal, which closed in profit, while today, we are giving it another try.

We saw a jump right after the US data was released, probably because of the non-farm payrolls coming short of expectations, but they posted a decent jump nonetheless. The AUD/USD increased around 40 pips, but the 50 SMA (yellow) held as resistance, and we decided to fade that move, selling AUD/USD below that moving average.

Non-farm payrolls report highlights for May 2021:

May US non-farm payrolls +559K vs +675K expected
Prior was 266K (revised to 278K)
Unemployment rate 5.8% vs 5.9% expected
Prior unemployment rate 6.1%
Participation rate 61.6% vs 61.8% expected (was 62.8% pre-pandemic)
Prior participation rate 61.7%
Underemployment rate 10.2% vs 10.4% prior
Average hourly earnings +0.5% m/m vs +0.2% expected
Average hourly earnings +2.0% y/y vs +1.6% expected
Average weekly hours 34.9 vs 34.9 expected
Two month net revision +27K
Change in private payrolls +492K vs +610K expected
Change in manufacturing payrolls +23K vs +25K expected
Long-term unemployed at 3.8m vs 4.2m prior
The employment-population ratio, at 58.0% vs 57.9% prior (61% before pandemic)
Full report

The drop in the unemployment rate is only because of falling labor force participation, which isn’t something you want to see. This is a disappointing number but it’s not really a catastrophe, because it’s well within the accepted range. It’s a goldilocks number for stocks, because it pushes a taper further off the table but doesn’t point to a slowdown in the economy.

That said, I would have hoped that the April-May reopening of the US economy would have led to much more than an average of +418K jobs in those two months. But that’s a decent month nonetheless, taking the unemployment rate down.

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