AUD/USD flirts with intraday low below 0.7500 on mixed Aussie employment report
|- AUD/USD consolidates the previous day’s recovery gains near yearly low, refreshes intraday bottom.
- Aussie Employment Change eases below forecasts, Unemployment Rate also drops in June.
- Covid variant woes, reflation concerns exert downside pressure amid DXY rebound.
AUD/USD seesaws around an intraday low of 0.7467, down 0.12% on a day, following the unclear signals of the Aussie employment report for June, published early Thursday. The reason could be traced to the downbeat market sentiment, as well as the US dollar recovery moves.
Australia’s headline Employment Change dropped below 30.0K expected and 115.2K prior to 29.1K in June while the Participation Rate remains unchanged at 66.2% versus 66.3% forecast. On the contrary, the Unemployment Rate declined to 4.9% during the stated month, contrary to 5.5% market consensus and 5.1% previous readouts. Earlier in the day, Aussie Consumer Inflation Expectations for July met forecasts of 3.7% compared to 4.0% prior.
Read: Aussie Unemployment Rate beats expectations, now below 5%, AUD bullish
In addition to the mixed employment figures, the sour mood of the markets also weighs on the risk-barometer pair. Behind the risk-off sentiment are concerns over the coronavirus (COVID-19) strains and reflation fears.
Fed Chairman Jerome Powell tried to convince markets that the US central bank will give “lots of notice” before adjusting the monetary policy in his bi-annual testimony. However, the strong US Producer Price Index (PPI), preceded by the upbeat Consumer Price Index (CPI), pushed traders to turn blind-eyed over Powell’s remarks.
On the other hand, worsening covid conditions in Australia become the key worry for the AUD/USD traders amid delays in the vaccine rollouts and variant spread. Recently, Aussie PM Scott Morrison said, per ABC News, that the vaccine rollout is two months behind. On the same line, World Bank Group President David Malpass said, per Reuters, “Vaccine shortages mean many countries in East Asia and Pacific may not fully vaccinate population until 2024 even as new variants emerge.”
Amid these plays, S&P 500 Futures drop 0.20% whereas the US 10-year Treasury yields decline for the second consecutive day, down 2.3 basis points (bps) to 1.33% by the press time. It should be observed that the US dollar index (DXY) consolidates the previous day’s losses around 92.40 and adds to the AUD/USD pair traders’ woes.
Having witnessed the initial market reaction to the Aussie jobs report, AUD/USD traders will keep their eyes on China’s data dump for June, as well as Q2 GDP, for fresh impulse. However, risk catalysts are likely to keep the driver’s seat.
Technical analysis
MACD teases bulls after two months but a clear upside break of the three-week-old resistance line, near 0.7485-90, becomes necessary for the AUD/USD to aim for the 200-DMA surrounding 0.7585. Any failures to do so could keep sellers hopeful to witness a fresh yearly low around the 0.7400 threshold.
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