Unemployment may have remained steady but, it’s not on track for RBA’s target which is seeing a rise in calls for RBA to cut in July.
Today was really all about the unemployment rate, which remained steady at 5.2% but missed expectations to fall to 5.1%. Were it not for the fact that RBA have target 5% by end of Q2, this may have been OK. But as markets were already pricing at 50% chance of a July cut yesterday, we suspect today’s employment data could tip the scales towards a July cut by the close of today.
We can see unemployment rising against RBA’s SOMP forecast and, with it pencilled in to drop to 4.8% by June 2021, further rises with unemployment will only hear calls for further cuts and sooner.
AUD is currently today’s weakest major with AUD/JPY being today’s biggest mover (and loser). We can see on the daily chart that AUD/JPY has just broken to its lowest level since January’s flash crash, in a bid to breakout of a sideways correction pattern. Moreover, a prominent swing high has formed with Monday’s bearish engulfing bar.
The 74.55 low makes an obvious, near-term target, although we expect AUD/JPY to break beneath the July 2016 low after an initial bounce, given the strength of bearish momentum leading into the correction.
As for AUD/USD, the retracement line and 0.6938 pivotal support level gave way ahead of the meeting (with the latter acting as today’s high). Currently at a 9-day low, momentum favours the bear-camp so we’d prefer to sell into intraday rallies and target key support levels.
Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.
Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.