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: 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.