The Australian dollar slid to the lowest since January 21st 2016 - if we discard the flash crash from January 2nd this year – amid disappointing job figures. The Australian dollar fell as low as 0.6893 against the greenback after the unemployment rate rose to 5.2% in April, leaving it at the highest level since August last year. The slight increase in the participation rate from 65.7% to 65.8% can’t solely explain the move as the number of full time jobs contracted by 6.3k, while labour market underutilisation rose by 34.7k.

A week ago, the Reserve Bank of Australia decided not to lower the Official Cash Rate and maintained it at 1.5% while most economist anticipated a reduction of 25bps. However, the tone of the statement was slightly dovish as it reiterated the view that the outlook for the global economy is “tilted to the downside”, while the outlook for household consumption remains the main domestic uncertainty. However, the RBA remained relatively optimist regarding the growth outlook. Despite this relatively enthusiastic statement, we believe that Philip Lowe is much closer to announce a cut than a raise. In addition, the RBNZ cut rate last week; therefore there is a solid probability that the RBA will walk in Adrian Orr’s footsteps.

Stay on top of the markets with Swissquote’s News & Analysis

Speculator are still net short Aussie and a continued to increase their positions. As of last last, total net short position reached 26% of total open interest (futures only). Given the likelihood of the RBA cutting rate at its next meeting in early June, we believe that the Aussie has room for further debasement with 0.6850 as next target. Nevertheless, investors should keep in mind that the Australian dollar is extremely sensitive to US-China trade war developments - as 35% of Australia’s export go to China – meaning positive news may trigger sharp upside moves.

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.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD looks south as markets scale back Fed rate cut bets

EUR/USD risks falling below key support at 1.1193 as markets seem to have scaled back expectations of Federal Reserve (Fed) rate cuts in the overnight trade. Technical set up favors the bears.


GBP/USD: Recovery underway as traders await UK CPI for fresh direction

A minor correction in the US dollar across its main competitors appears to prompt a recovery in GBP/USD from 27-month lows, as the rates hold above the 1.24 handle ahead of the UK CPI data. Hard Brexit woes to remain in play.


USD/JPY supported by positive S&P 500 futures amid weaker USD

USD/JPY found buyers ahead of the 108 handle amid an uptick in S&P 500 futures, although the recovery appears limited by broad-based USD retreat and mixed Asian equities. Focus on US housing data for fresh impetus.


UK CPI Preview: Brexit above all else

The monthly change in the consumer price index is expected to be flat in June down from 0.3% in May. The annual rate is predicted to be unchanged at 2 %. The core CPI rate is forecast to be flat in June, after gaining 0.2% in April.

Read more

Gold clings to 21-DMA amid less active markets

Gold carries the 3-week old lower high formation forward as it clings to 21-day moving average (DMA) during Wednesday’s less active market hours ahead of the European session. Lack of major data/news during the Asian session limits market moves.

Gold News