Shorting AUD/USD Again, After the US Employment and Earnings Reports
AUD/USD popped higher on US jobs missing expectations
Skerdian Meta•Friday, June 4, 2021•2 min read
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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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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