The Australian dollar (AUD/USD) consolidates the previous day’s rebound gains at the yearly low, refreshing the intraday bottom.
In June, Australia’s employment change is lower than expected, and the unemployment rate is also lower.
Despite the DXY’s rise, Covid variant troubles and reflation concerns put downward pressure on the currency.
Following the ambiguous indications of the Australian employment report for June, released early Thursday, the AUD/USD seesaws around an intraday low of 0.7467, down 0.12 percent on the day. The explanation for this might be traced back to the market’s pessimistic mood as well as the US dollar’s recovery efforts.
Australia’s front page While the Participation Rate remained steady at 66.2 percent versus 66.3 percent projected, Employment Change fell below 30.0K expected and 115.2K before to 29.1K in June. In contrast to market expectations of 5.5 percent and earlier readings of 5.1 percent, the unemployment rate fell to 4.9 percent in the stated month. Earlier in the day, Australian Consumer Inflation Expectations for July came in at 3.7 percent, down from 4.0 percent the previous month.
Read more: Australia’s Unemployment Rate Beats Expectations, Now Under 5%, AUD Bullish
Aside from the mixed employment numbers, the risk-barometer pair is also weighed down by the market’s gloomy attitude. Concerns about coronavirus (COVID-19) strains and fears of reflation are driving the risk-off attitude.
In his bi-annual testimony, Fed Chairman Jerome Powell tried to persuade markets that the US central bank will offer “a lot of notice” before changing monetary policy. However, traders were blinded by Powell’s statements due to the high US Producer Price Index (PPI), which was followed by an upbeat Consumer Price Index (CPI).
Worsening covid conditions in Australia, on the other hand, have become a major concern for AUD/USD traders, owing to delays in vaccine rollouts and variant spread. According to ABC News, Australian Prime Minister Scott Morrison recently stated that the vaccine deployment is two months behind schedule. “Vaccine shortages mean several countries in East Asia and the Pacific may not fully vaccinate their populations until 2024,” World Bank Group President David Malpass said, according to Reuters.
S&P 500 futures fell 0.20 percent amid these moves, as US 10-year Treasury yields fell for the second day in a row, falling 2.3 basis points (bps) to 1.33 percent by press time. It’s worth noting that the US dollar index (DXY) is consolidating its previous day’s losses around 92.40, adding to the AUD/USD pair’s troubles.
Following the first market reaction to the Australian jobs report, AUD/USD traders will be looking for new direction in China’s data dump for June, as well as Q2 GDP. Risk catalysts, on the other hand, are expected to remain in the driver’s seat.
After two months, the MACD teases bulls, but a decisive upside breach of the three-week-old resistance line, near 0.7485-90, is required for the AUD/USD to go for the 200-DMA near 0.7585. Failure to do so could encourage sellers to expect a new yearly low around the 0.7400 level./n
