AUD/USD – Aussie slide continues as U.S. jobless claims drop sharply

AUD/USD continues to head lower this week. Currently, the pair is trading at 0.6906, down 0.35% on the day. On the release front, Australian employment numbers were mixed. The economy created 28.4 thousand jobs in April, marking a 3-month high and crushing the estimate of 15.2 thousand. However, the unemployment rate climbed to 5.2%, higher than the estimate of 5.0%. This is the highest level since August. In the U.S., unemployment claims fell to 212 thousand, their lowest level in four weeks. There was more positive news, as housing and manufacturing reports improved in April and beat their forecasts.

The escalation in trade tensions between the U.S. and China has caused sharp swings in global equity markets and also pushed the Australian dollar lower this week. AUD/USD has dropped 1.4% this week, and is down over 2% in the month of May. Risk appetite has dampened after the latest round of tariffs which the U.S. and China have imposed on each other’s products. Meanwhile, China posted disappointing numbers, as industrial production and retail sales fell sharply in April. This has contributed to the Aussie’s woes, as the currency acts as a proxy for sentiment towards the Chinese economy.

Australians head to the polls on Friday in a very tight race between the center-right Liberals and the left-leaning Labor. After years of a booming economy, Australia has been gripped by a slowdown, as the global trade war and a weaker Chinese economy has damaged the export-reliant Australian economy. The markets are hopeful that the winner will be able to form a majority government that will be able to serve a full term. A close finish between the parties could result in a minority government, and the resulting uncertainty could dampen sentiment towards the Australian dollar.

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AUD/USD Fundamentals

Wednesday (May 15)

• 21:30 Australian Employment Change. Estimate 15.2K. Actual 28.4K
  
• 21:30 Australian Unemployment Rate. Estimate 5.0%. Actual 5.2%

Thursday (May 16)

• 8:30 US Building Permits. Estimate 1.29M. Actual 1.30M
  
• 8:30 US Unemployment Claims. Estimate 220K. Actual 212K
  
• 8:30 US Philly Fed Manufacturing Index. Estimate 10.0. Actual 16.6
  
• 8:30 US Housing Starts. Estimate 1.21M. Actual 1.24M
  
• 10:30 US Natural Gas Storage. Estimate 105B
• 12:15 US FOMC Member Brainard Speaks

Friday (May 17)

• All Day – Australian Parliamentary Elections
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 97.8

*All release times are DST

* Key events are in bold

AUD/USD for Thursday, May 16, 2019

Open: 0.6928 High: 0.6933 Low: 0.6893 Close: 0.6906

AUD/USD Technical

AUD/USD has edged lower in the Asian session but recovered in European trade. The pair has resumed the downward trend in the North American session

• 0.6825 is providing support
• 0.6968 is the next resistance line
• Current range: 0.6825 to 0.6968

Further levels in both directions:

• Below: 0.6825, 0.6744 and 0.6686
• Above: 0.6968, 0.7085, 0.7190 and 0.7240

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