AUD/USD – Australian Dollar Volatile after Sky-High Employment Change

The Australian dollar continues to slide on Thursday, as AUD/USD struggles to stay above the 0.91 line in the North American session. The Aussie has had a dismal week, losing over 250 points. There was some bewilderment in the markets and volatility on the part of the Australian dollar as Australian Employment Change came in at 121,000. The Australian unemployment rate dipped to 6.1%. In the US, Unemployment Claims rose to 315 thousand, well above the estimate.

US employment numbers continue to raise concern. Unemployment Claims rose to 315 thousand, the largest number of claims in 10 weeks. The reading was much higher than the estimate of 306 thousand. This follows soft numbers from JOLTS Job Openings and a dismal Nonfarm Payrolls last week. The troubling job numbers are unlikely to affect the Fed’s plan to continue trimming QE next week, but a weak labor market could postpone plans to raise interest rates by mid-2015.

Australian employment numbers made headlines on Thursday, as Employment Change posted an incredible gain of 121,000 last month, crushing the estimate of 15,000. The markets are having some difficulty accepting these stratospheric figures at face value, with one Australian analyst noting that the numbers are “somewhat difficult to interpret”. The Australian statistics bureau claimed that a rotation in its survey group affected the August figures, and we’re likely to hear more about the authenticity of these numbers in the next few days. There were no doubts about the veracity of the unemployment rate, which dipped to 6.1%, beating the estimate of 6.3%.  The Aussie posted gains after the employment releases but then retracted and continued to head southward.

Confidence in the Australian economy appears to be waning, according to the latest business and consumer confidence data. Westpac Consumer Sentiment had been steadily improving, but the upswing came to a crashing halt as the indicator slipped by 4.6% in August. This marked a 4-month low. Earlier this week, NAB Business Confidence, a key indicator, slipped to 8 points in August, compared to 11 points a month earlier. Weak business and consumer confidence in Australia’s economy could translate into decreased spending by consumers and businesses, which would be grim news for the weak economy.

The Australian dollar is sensitive to key Chinese releases, as China is Australia’s biggest trading partner. Chinese Trade Balance hit a record high in August, as the surplus climbed to $49.8 billion, easily beating the estimate of $40.8 billion. Stronger Chinese exports should translate into increased demand for Australian raw materials, which bodes well for the Australian export sector and the Aussie. On Thursday, Chinese CPI came in at 2.0%, as the index fell to a 4-month low.

AUD/USD for Thursday, September 11, 2014

AUD/USD September 11 at 14:35 GMT

AUD/USD 0.9114 H: 0.9218 L: 0.9096

AUD/USD Technical

• AUD/USD posted strong gains in the Asian session, touching a high of 0.9020. The pair was unable to consolidate and has been gradually losing ground in the European and North American sessions, as the US dollar continues to put pressure on the Aussie.
• 0.9020 is providing strong support.
• 0.9119 is an immediate resistance line and could see further action during the day. 0.9229 is stronger.
• Current range: 0.9119 to 0.9229

Further levels in both directions:

• Below: 0.9020, 0.8953. 0.8820 and 0.8860
• Above: 0.9119, 0.9229, 0.9361, 0.9446 and 0.9617

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions on Thursday, reversing the direction seen a day earlier. This is not consistent with the pair’s movement, as the Australian dollar continues to lose ground. The ratio continues to have a majority of long positions, indicative of trader bias towards the Australian dollar reversing directions and moving higher.

AUD/USD Fundamentals

• 1:30 Australian Unemployment Rate. Estimate 6.3%. Actual 6.1%.
• 1:30 Australian Employment Change. Estimate 15.2K. Actual 121.0K.
• 12:30 US Unemployment Claims. Estimate 306K. Actual 316K.
• 14:30 US Natural Gas Storage. Estimate 84B. Actual 92B.
• 17:01 US 30-year Bond Auction.
• 18:00 US Federal Budget Balance. Estimate -132B.

* Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.