AUD/USD plunges from 0.7470 on higher than expected Unemployment Rate at 4%
|
- AUD/USD has attracted significant offers as the Australian jobless rate has landed at 4%.
- This has underpinned a neutral stance by the RBA in May’s monetary policy.
- The risk-on impulse has pushed the DXY below 100.00.
The AUD/USD pair has witnessed a steep fall after hitting an intraday high of 0.7468 as the Australian Bureau of Statistics has reported the Unemployment Rate at 4%. Australian jobless rate has remained lower than the market consensus of 3.9% but similar to the prior print of 4%. While, the Employment Change has landed at 17.9k, significantly lower than the estimates and the previous figure of 40k and 77.4k respectively.
Higher unemployment levels are signaling stagnant labor market conditions. It is worth noting that the University of Melbourne has reported the Consumer inflation expectations at 5.2%, significantly higher than the forecast of 4.6%.
It seems that the collective impact of higher consumer inflation expectations and a flat labor market will be resulted in a neutral stance by the Reserve Bank of Australia (RBA). Investors should be aware of the fact that the RBA kept its monetary policy unchanged last week. RBA Governor Philip Lowe dictated that the RBA is opting for a ‘wait and watch’ approach as the current price pressures are not advocating any sudden requirement of interest rate elevation. However, a rate hike can be announced later this year.
Meanwhile, the US dollar index (DXY) has witnessed an intense sell-off after a nine-day winning streak on Wednesday. The DXY has tumbled sharply below the critical support of 100.00. A firmer rebound in Wall Street on Wednesday has underpinned a positive market sentiment as the fears of higher US inflation faded away. This has further increased the demand for risk-perceived assets.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.