AUDUSD Still Stuck Between MAs After Australian Employment

The USD to AUD rate has shown volatility within a defined range, however AUD/USD still remains in a 1-cent range. We saw a 100 pip jump yesterday a key economic event such as the US CPI inflation release, which showed after a weaker-than-expected US CPI report in May, piercing above the 200 SMA (purple).

Australian jobs report for May and Unemployment Rate

However, there was a retreat after the FED meeting, and the price retreated back below this moving average. Traders were anticipating FED’s Powell hint at a potential interest rate cut from both the Federal Reserve (FED) but he refused to commit to such an idea, so markets are pricing in just one FED rate cut in 2024, down from two ahead of the meeting.  At the bottom of the range, the 100 SMA (red) is acting as support, which seems like a good place to buy the Australian dollar against the USD.

AUD/USD Chart Daily – The 200 SMA Continues to Act As ResistanceChart AUDUSD, D1, 2024.06.12 21:48 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

The Australian employment report was predicted to show a stable pace of job growth at around 39,000 gained in May, up from to 38.5K in April, while the unemployment rate is expected to fall to 4.0% from 4.1% before. However the numbers today are unlikely to influence the RBA’s position, which is expected to remain unchanged until at least 2025, unless they were quite weak. So, AUD/USD will continue to trade in this range until the USD does something.

Australia Employment Report for May

Key Data Points:

  1. Unemployment Rate:
    • May: 4.0% (as expected)
    • April: 4.1%
  2. Participation Rate:
    • May: 66.8% (vs 66.7% expected)
    • April: 66.7%
  3. Employment Change:
    • May: +30.5K (vs +38.5K expected)
  4. Underemployment Rate:
    • May: 6.7% (unchanged from April)
  5. Underutilisation Rate:
    • May: 10.7%
  6. Monthly Hours Worked:
    • May: Decreased to 1,951 million hours

Implications and Market Impact:

Unemployment and Participation Rates:

  • Unemployment Rate: The decrease in the unemployment rate to 4.0% from 4.1% is a positive indicator, aligning with expectations and suggesting a modest improvement in labor market conditions.
  • Participation Rate: The slight increase in the participation rate to 66.8% from 66.7% suggests more individuals are entering the workforce, indicating confidence in job prospects.

Employment Change:

  • The employment change figure came in at +30.5K, which is lower than the expected +38.5K. While this is still positive job growth, it falls short of expectations, potentially indicating a slight softening in the pace of job creation.

Underemployment and Underutilisation:

  • The underemployment rate remained steady at 6.7%, suggesting that a portion of the workforce still desires more hours of work than currently available.
  • The underutilisation rate at 10.7% encompasses both the unemployed and underemployed, highlighting a broader measure of labor market slack.

Monthly Hours Worked:

  • The decrease in monthly hours worked to 1,951 million hours indicates a reduction in the total amount of labor being utilized, which could suggest either a reduction in demand for labor or more part-time work relative to full-time employment.

AUD/USD Live Chart

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Skerdian Meta
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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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