Australian Dollar: USD/AUD (AUD=X) falls after Australia unemployment rate rises in March

Australian Dollar: USD/AUD (AUD=X) falls after Australia unemployment rate rises in March

Australian Dollar: USD/AUD (AUD=X) falls after Australia unemployment rate rises in March

The AUD/USD pair declined after the Australian Bureau of Statistics (ABS) released upbeat March jobs numbers. The data showed that the country’s job market remained steady before coronavirus restrictions started.

According to ABS, trend employment increased by about 17,000 people in March. Most of these jobs, around 9,000, were full-time employees while about 8,000 were part time. As a result, the economy added more than 224,000 jobs in the past twelve months. This was a 1.8 per cent increase, which was slightly below the average annual growth of the past two decades.

The unemployment rate rose slightly to 5.2 per cent in March. This was better than the 5.3 per cent that most analysts polled by Bloomberg were expecting. The underemployment rate increased to 8.8 per cent from the previous 8.7 per cent. This rate measures the people of working age who want and are available to work for more hours.

The participation rate remained steady at 66.0 per cent, which is also better than the estimated 65.9 per cent. Meanwhile, the economy added about 6,000 jobs in March, bringing the total labour force to 13 million. The number of hours worked in the month also increased to 8.6 million.

While these numbers were impressive, Bruce Hockman, the Chief Economist, warned that they did not capture the full impact of the coronavirus lockdown. This is mostly because the survey is carried out in the first two weeks of the month. He said:

“Given the expected unseasonal change in key labour market indicators in the current COVID-19 context, the ABS will increase the focus on seasonally adjusted over trend data estimates for April and subsequent months.”

April numbers will likely be worse than those released today. Indeed, several big companies have started warning their employees of what to come. Recently, Crown Resorts warned that more than 18,500 jobs were at risk. The Australian Hotels Association has also warned that more than 250,000 jobs could be lost.

Hope from a distance

The Australian dollar has been upbeat for three main reasons. First, the Reserve Bank of Australia has offered a swift monetary policy response. It has brought interest rates to its lowest level in history and started quantitative easing.

Second, the Australian government has launched a massive fiscal stimulus program worth more than $189 billion. This package will help most companies deal with the crisis and maintain their workforce.

Third, data from China show that the country has bounced back from the crisis. The country’s manufacturing PMI from Caixin and China Logistics was above 50 in March. At the same time, the country’s exports and imports rose faster than expected in March. This is important because China is Australia’s biggest trading partner.

Finally, the government has started to open the economy gradually. This happened as the number of new coronavirus cases have declined. While Australia will go through a recession, these actions will help it recover faster.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 0.65.

The projected lower bound is: 0.60.

The projected closing price is: 0.63.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 61.1256. This is not an overbought or oversold reading. The last signal was a sell 0 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 51.90. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 17 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 45. This is not a topping or bottoming area. The last signal was a sell 1 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 14 period(s) ago.

Rex Takasugi – TD Profile

FOREX AUD= closed down -0.004 at 0.628. Volume was 47% below average (neutral) and Bollinger Bands were 64% wider than normal.

Open High Low Close Volume___
0.632 0.632 0.626 0.628 39,071
Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.63 0.64 0.67
Volatility: 22 23 13
Volume: 103,136 93,063 65,663

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX AUD= is currently 6.5% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into AUD= (mildly bullish). Our trend forecasting oscillators are currently bullish on AUD= and have had this outlook for the last 5 periods.

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