AUD/USD Hits Fresh Lows On Trade, Trump and Wages Miss | Employment Up Next

The Aussie found itself under pressure ahead of today’s wage data, thanks to soft consumer growth and Trump’s latest trade-twist. Just 27-pips above 69c, it may take more than stronger employment tomorrow for this level to hold.

The Aussie found itself under pressure ahead of today’s wage data, thanks to soft consumer growth and Trump’s latest trade-twist. Just 27pips above 69c, it may take more than stronger employment tomorrow for this level to hold.

Quarterly wage growth slightly undershot expectations, coming in at 0.5% versus 0.6% expected, whilst the annual rate remained unchanged at 2.3%. Transport, warehousing, education and training saw the highest rises at 0.7% which seven of the sub-indices were a mere 0.2%.

Tomorrow’s employment data will be a core focus for traders. In their May OCR statement, the RBA emphasised they’ll ‘be paying close attention to developments in the labour market at its upcoming meetings’. As it stands, they remain optimistic with employment data which they believe will ‘further lift wage growth over time’ – so any weakness to the labour market should lower expectations for wages, inflation (which is already pointing lower) and therefor see a rising expectation for further easing.  The RBA caught bears off guard at their last meeting by holding rates at 1.5%, although this is most likely to be due to their federal election on Sunday. But they’ll be looking to reinitiate positions if employment starts to buckle.

70c remain a key line in the sand for traders. Currently trading at its lowest level since January 2016, AUD is also under pressure from soft consumer sentiment and news of Trump’s forthcoming executive order to ban US companies form using Huawei technology. In a move clearly designed to stir up trade tensions, the usual rules applied which saw traders move towards safety (CHF and JPY) and short commodity currencies (AUD, NZD and CAD).

AUD/USD is currently closer to 69c than 70c, but we could see bears fade into any moves below 0.7000 in hope of testing the March 2014 low. It’s difficult to see how a mediocre employment set (hitting consensus) would see AUD/USD explode higher unless trade tensions are to thaw. Although if unemployment were to fall to 4.9% and employment beat expectations, then we can consider a counter-trend rally back to 70c. For now, trade tensions remain a key driver of AUD headwinds so a poor employment set tomorrow could see it break below 69c.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. 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 warranty 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, author does not guarantee its accuracy or completeness, nor does 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.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account