Breaking: Bearish Aussie Unemployment Rate back to 5.3% vs 5.2% expected, AUD slides

• AUD lower on the unemployment rate miss of 0.1%.
• Full-time employment was very strong as was participation rate (cushioning the Unemployment Rate miss).
• Bids in AUD/USD ahead of 0.6650 and improving risk appetite should cushion fall.
• AUD/NZD at critical support structure, 1.0450. 

The Australian labour force data has been released. The emphasis that the Reserve Bank of Australia has put on the report lies with the unemployment rate. There has been a bullish trend to date which has given rise to the speculation that the RBA will not cut rates in the immediate future, supporting AUD higher. 

Aussie jobs data in full 

• Australia Jan Employment +13.5k s/adj (Reuters poll: +10.0k).
• Australia Jan Unemployment rate +5.3 %, s/adj (Reuters poll: +5.2).
• Australia Jan Full time employment +46.2k s/adj.
• Australia Jan Participation rate +66.1 %, s/adj (Reuters poll: +66.0 pct).

AUD reaction

• AUD/USD reaction: In the preview, by Valeria Bednarik, the Cheif analyst at FXStreet, AUD/USD was forecasted to be at risk of breaking through an over one-decade low of 0.6661. As a result of the data, AUD/USD has fallen to a low of 0.6669 release. It was around 0.6690 before the data and slipped to 0.6668 briefly. Bids ahead of 0.6650 and improving risk appetite should cushion fall.
• AUD/NZD reaction: Following the analysis prior to the event, AUD/NZD Price Analysis: Bears looking for a break to 1.0390, although bullish outlook constructive to 1.05 handle, AUD/NZD has indeed fallen back to 1.0450 support structure from 1.0470 prior to the release. 

Unemployment Rate in decline

Source

Editor's notes

Markets were looking for the unemployment rate to nudge higher from 5.1% in December to 5.2% in January whereby the unemployment rate printed below consensus in Nov and Dec, falling from 5.3% to 5.1% over those months. A lower print than 5.2% or 5.1% will be highly bullish for AUD going forward, just wasn't to be this time around. 

Description

The Unemployment Rate release by the Australian Bureau of Statistics is the number of unemployed workers divided by the total civilian labour force. If the rate hikes, it indicates a lack of expansion within the Australian labour market. As a result, a rise leads to weaken the Australian economy. A decrease of the figure is seen as positive (or bullish) for the AUD, while an increase is seen as negative (or bearish).

Statement by Philip Lowe, Governor: Monetary Policy Decision

The unemployment rate declined in December to 5.1 per cent. It is expected to remain around this level for some time, before gradually declining to a little below 5 per cent in 2021. Wages growth is subdued and is expected to remain at around its current rate for some time yet. A further gradual lift in wages growth would be a welcome development and is needed for inflation to be sustainably within the 2–3 per cent target range. Taken together, recent outcomes suggest that the Australian economy can sustain lower rates of unemployment and underemployment,

– Feb 4th Statement.

Additional focus for AUD

Markets are also concerned for the coronavirus. AUD can recover on bullish sentiment related to positive developments, as described here: Coronavirus peaking? How will it impact the global economies and FX?