AUD/USD – Aussie Slides Despite Strong Australian Job Numbers

The Australian dollar has posted sharp losses on Thursday, erasing the gains recorded in the Wednesday session. The pair is trading at 0.7330 in the North American session. On the release front, Australian Employment Change posted a strong gain of 17.9 thousand, well above expectations. In the US, consumer inflation was within expectations, as Core CPI and CPI both posted small gains of 0.2%. The Philly Fed Manufacturing Index beat expectations, but Unemployment Claims was higher than expected. On Friday, the US releases Building Permits, a key release.

Australia posted strong job numbers in May. Employment Change jumped higher, with a reading of 17.9 thousand, above the forecast of 14.9 thousand. The unemployment rate remained steady, posting a rate of 5.7% for the third straight month. However, most of the new jobs were part-time positions. Analysts have identified a troubling trend in the labor market, as part-time employment is growing while full-time employment is on the decrease. This trend has led to downward pressure on wages, as wage growth in the first quarter year-on-year dipped from 2.2 percent to 2.1 percent. Meanwhile, New Motor Vehicle Sales, an important gauge of consumer spending, declined 1.1%, marking the third decline in four months.

The Federal Reserve was center stage on Wednesday, but there was no surprises as the Fed opted for the sidelines and held the benchmark rate at 0.25%, where it has been pegged since December 2015. A dismal Nonfarm Payrolls report and dovish statements from Fed chair Janet Yellen and her colleagues had all but decimated any chance of a June hike. Back in April, Fed chair Janet Yellen had renewed hopes of rate hike in the summer, when she said that she expected a rate hike in “the coming months”. The Fed’s tone has drastically changed since then, and there is a strong likelihood that the Fed will raise rates only once in 2016. The Fed statement did not shed any light on the timing of a rate hike, although many analysts are circling September in their calendars. The statement was cautious in tone, stating that the Fed expects US inflation levels to remain at low levels in the near term. As well, the Fed lowered its rate path outlook for 2016 and 2017. Gone are the heady days of December, when the Fed hinted that it could raise rates up to four times in 2016. Many analysts were skeptical about this rosy (brash?) prediction, and it appears that the Fed was overly optimistic about the strength of the US economy.

Wednesday (June 15)

• 21:00 Australian MI Inflation Expectations. Actual 3.5%
• 21:30 Australian Employment Change. Estimate 14.9K. Actual 17.9K
• 21:30 Australian Unemployment Rate. Estimate 5.7%. Actual 5.7%
• 21:30 Australian New Motor Vehicle Sales. Actual -1.1%
• 21:30 RBA Bulletin
• 20:30 RBA Deputy Governor Philip Lowe Speaks

Thursday (June 16)

• 8:30 US CPI. Estimate 0.3%. Actual 0.2%
• 8:30 US Core CPI. Estimate 0.2%. Actual 0.2%
• 8:30 US Philly Fed Manufacturing Index. Estimate 1.1. Actual 4.7
• 8:30 US Unemployment Claims. Estimate 267K. Actual 277K
• 8:30 US Current Account. Estimate -125B. Actual -125B
• 10:00 US NAHB Housing Market Index. Estimate 59
• 10:30 US Natural Gas Storage. Estimate 66B

Upcoming Key Releases

Friday (June 17)

• 8:30 US Building Permits. Estimate 1.15M

*Key releases are highlighted in bold

*All release times are EDT

AUD/USD for Thursday, June 16, 2016

AUD/USD June 16 at 9:30 EDT

Open: 0.7414 Low: 0.7324 High: 0.7434 Close: 0.7329

AUD/USD Technical

• AUD/USD has posted losses throughout the Thursday session
• 0.7339 remains fluid and is currently in a resistance role. It is a weak line
• 0.7251 is providing support
• Current range: 0.7251 to 0.7339

Further levels in both directions:

• Below: 0.7251, 0.7160 and 0.7011
• Above: 0.7339, 0.7472, 0.7612 and 0.7739

OANDA’s Open Positions Ratio

AUD/USD ratio is showing little movement on Thursday. Long positions command a majority (58%), indicative of trader bias towards AUD/USD reversing directions and moving to higher ground.

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.