Australia’s Turn in the Spotlight
Joe Perry March 18, 2020 11:17 PM
Australia Employment Change for February is due out in a few hours, with headline expectations of +10,000 jobs vs +13,500 jobs in January. The unemployment rate for February is expected to remain unchanged at 5.3%. As with most countries, this is usually the highlight economic data point for the month for Australia. However, this month is different, as the fears of the coronavirus have taken hold of world economies, interest rates, currencies, and stock prices. If Australia’s employment data follows the trend of the rest of the world, it will have little effect on markets ahead of the RBA emergency monetary policy meeting later.
In addition, the Reserve Bank of Australia (RBA) is due to release its quarterly Bulletin, which discusses economic and financial developments, as well as the Bank’s operations. This may give some insight into the emergency announcement as well, which is due three hours later.
Central banks around the globe have been holding emergency meetings and slashing interest rates. The Bank of Canada cut interest rates on Friday by 50bps in a surprise move. The Bank of Japan was set to have their meeting today, however they moved it up to Monday to announce they would double the size of their ETF buying for JPY 12 trillion. New Zealand likewise intervened on Monday and cut interest rates by 75bps to 0.25%. Not the be outdone, the US Federal Reserve, which was supposed to have their meeting yesterday, jumped the gun and cut rates from 1.25% to 0% before the futures open on Sunday night. The list goes on. However, today is the RBA’s turn in the sun and they are expected to cut rates from a record low of 0.5% to 0.25%. In addition, the RBA is expected to announce a QE program of their own. RBA Governor Philip Lowe will speak shortly afterwards.
AUD/USD is trading at levels not seen since early 2003, with the pair down 11% since the beginning of March, and 6.5% this week alone, trading just under .5800.
Source: Tradingview, FOREX.com
This move is primarily due to fear of the coronavirus and the flight to safety move into the US Dollar. .5800/.5780 does provide a support zone from 2003, however as long as there is the bid in US Dollars, technicals probably won’t play as much of a role in determining price. On a bounce, there is some horizontal resistance near .5960 and then at yesterday’s highs near .6028.
Source: Tradingview, FOREX.com
Although there is employment data, the RBA Bulletin, and an emergency RBA meeting shortly, these factors many not have much of an effect on the AUD/USD. They are most likely already priced in.
Disclaimer: GAIN Capital UK Limited (trading as "Forex.com") is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, Forex.com does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by Forex.com or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although Forex.com is not specifically prevented from dealing before providing this material, Forex.com does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
For further details see our full non-independent research disclaimer and quarterly summary.