AUD/USD Showing Signs of Turning Bullish After the Employment Report
AUD/USD has been bearish since early February, although it has been showing signs of a bullish reversal since the second week of March, as the USD resumed the retreatat. Although, the AUD has been weak as well, with gains being minimal compared to other risk currencies.
Yesterday AUD/USD jumped to 0.6723, reaching a one-week high after the release of the US CPI report. The US Dollar tumbled across the board and risk assets such as stocks and commodity dollars rose. The US Consumer Price Index increased by 0.1% in March, below the 0.4% increase of February and smaller than the 0.3% of market consensus. The CPI YoY rose by 5% through March, the slowest in almost two years.
Although, core CPI remained high as it rose by 0.4% which was in line with expectations, while the annual rate ticked up to 5.6% from 5.5% previously. In the evening, the FED releases the minutes from its latest monetary policy meeting. After the numbers, Treasury bond rallied and the US Dollar sank. The US 10-year dropped to 3.34% and the 2-year to 3.90%.
AUD/USD retook the 0.6700 zone and climbed to 0.6723. It is holding firm, with the price above key moving averages in the four-hour chart. More gains could face resistance at 0.6725/30, and above the next target stands at 0.6755. A slide back below 0.6675 would weaken the outlook for the Aussie.
AUD/USD H4 Chart – Buyers Trying to Push Above MAs
The lows are getting higher for this pair since early March
- Employment Change: +53.0K vs +20.0K expected
- February employment change was+64.6K
- Unemployment Rate: 3.5% and also a beat
- expected 3.6%, prior 3.5%
- Full-Time Employment Change: +72.2K
- expected +8.0, prior was 74.9K
- Part-Time Employment Change: -19.2K
- prior was -10.3K
- Participation Rate: 66.7%, higher – this will add to the gloss on the jobless rate beat
- expected 66.6%, prior was 66.6%
- Underemployment 6.2% (prior 5.8%)
- Underutilisation rate 9.7* (prior 9.3%)
- Hours worked fell by -0.2% (seasonally adjusted)
- prior +3.8%
This is a very strong report. If the Reserve Bank of Australia is worried about how its rate hikes are impacting the jobs market this’ll go some way to ease those fears. The prospects of a May rate hike have risen after this report. Of course we await the latest inflation indications, the next quarterly CPI data is due on Wednesday 26 April