AU jobs beat unable to boost friendless AUDUSD
Tony Sycamore August 19, 2021 3:33 AM
The Reserve Bank of Australia has consistently maintained it will not raise the cash rate away from its 0.10% emergency setting until inflation is sustainably between two and three percent.
A key driver of higher inflation needed to reach the RBA's target is higher wages growth. As noted by the RBA, a tighter labour market is required to lift wages growth which takes time.
"In the Bank's central scenario, it takes some years for the stronger economy to feed through into wage and price increases that are consistent with the inflation target."
Following yesterday's weaker Q2 wage price index at 1.7% y/y vs. consensus of 1.9% y/y, today's better than expected labour force data for July has come as somewhat of a surprise, given the extent of lockdowns across regions of NSW.
Employment rose +2.2k rise compared to median expectations for a -46.6k fall, and the unemployment rate fell to 4.6% vs. expectations of a rise to 5.0%. The fall in the participation rate from 66.2% to 66.0% partly explaining the lower unemployment rate. Monthly hours worked decreased by 3 million hours.
The head of Labour Market Statistics at the ABS, Bjorn Jarvis, was quick to point out "The fall in the national unemployment rate in July should not necessarily be viewed as a sign of strengthening in the labour market – it's another indication of the extent of reduced capacity for people to be active in the labour market, in the states with the largest populations."
The better than expected jobs data means the worst is still to come in August, September, and October. With this in mind, the AUDUSD could not muster anything other than a quick 15 point bounce to .7235 before making fresh cycle lows.
Technically, the path of least resistance is lower for the AUDUSD, and providing the AUDUSD remains below resistance at .7320/30, the decline is expected to continue towards .7000c.
Source Tradingview. The figures stated areas of August 19th, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
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 Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.