AUD extends gains amid solid job report

Among the G10 complex, the Australian dollar was the sole currency in positive territory this morning after the publication of the last job report from the Australian Bureau of Statistics.

The Aussie was up 0.26% against the greenback on Thursday, up to $0.7451, while most of currencies partially reversed yesterday’s sharp gains against the USD.

In April, the unemployment rate inched lower for the second month in a row, down to 5.7% from 5.9%, as the economy added 37.4k jobs (seasonally adjusted). The participation rate held steady at 64.8%. However, the details of the report are not that rosy as full-time employment decreased by 11.6k jobs, while part-time employment rose by 49k, suggesting that the job market is not as healthy as the headline figure suggests.

We reiterate our view that the picture is not that bright for the Australian, particularly in view of growing concerns about China’s economic outlook, which sent iron ore prices into free-fall. Therefore, we do not rule out further AUD weakness, even though a stabilisation of the Aussie is the most likely narrative at the moment.

As explained last week, investors are still heavily positioned for further appreciation of the Aussie. The unwinding of the long speculative positions - net long non-commercial positions currently stand at around 21% of total open interest as reported by the CFTC - should continue, which could potentially only accelerate the AUD debasement.

This report has been prepared by AC Markets and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by AC Markets personnel at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.