Australian Employment Preview: Near-term relief to the long-lasting pain


Share:

  • Australia is expected to have created 25,000 new job positions in September.
  • The Reserve Bank of Australia is nowhere near the US Federal Reserve's stance on monetary policy.
  • AUD/USD’s bearish trend is likely to be unaffected by Australia’s employment data.

Australia will publish its September employment report on Thursday, October 20. The country is expected to have added 25,000 new jobs, decreasing from the previous 33,500. The Unemployment Rate is expected to remain unchanged at 3.5%, as well as the Participation Rate, currently at 66.6%. Alongside the employment figures, the country will release Q3 NAB’s Business Confidence, foreseen to improve to 7 from 5 in the second quarter of the year.

Encouraging data may give AUD/USD a well-needed boost, as the pair trades near the two-year low posted this month at 0.6169, but would it be enough to take it out of its misery?

The RBA vs. the Fed

The Reserve Bank of Australia decided to hike the cash rate by 25 bps in October, easing quantitative tightening after pulling the trigger by 50 bps for four consecutive months, which took the main rate to 2.6%. The Minutes of the meeting released this week showed that policymakers believe that the effects of the recent hikes have yet to take effect on the economy, somehow justifying the smaller move, despite being convinced inflation is still “too high.”

But the real reason behind the latest RBA monetary policy decision is fear. Given that the “cash rate had been increased substantially in a short period of time,” the risk of a recession is greater. Governor Philip Lowe is going slower than its overseas counterparts, as he sees how other economies are rapidly deteriorating as rate hikes have little impact on inflation.

The US Federal Reserve has no such concern. The United States central bank is on its way to pushing rates into restrictive levels and keeping them there “for some time,” according to the latest FOMC Meeting Minutes. The Australian central bank is nowhere near a restrictive monetary policy

However, AUD/USD may continue to track the negative slope in the 50-Day SMA (0.6684) as the minutes from the RBA’s October meeting reveal that “a smaller increase than that agreed at preceding meetings was warranted given that the cash rate had been increased substantially in a short period of time,” and the comments suggest the central bank is nearing the end of the hiking-cycle as Governor Philip Lowe and Co. show little intentions of carrying out a restrictive policy.

AUD/USD possible scenarios

Central banks’ imbalance had a negative impact on AUD/USD, and given the current scenario, the pair’s bearish trend will likely prevail. For sure, upbeat figures should mean a temporary recovery, but the pair would need a stronger reason to run north.

A relevant resistance level comes at around 0.6345, the 23.6% Fibonacci retracement of the 0.6915/0.6169 slump. Sellers have rejected recovery attempts around it ever since bottoming at fresh 2022 lows in the previous week. The 38.2% retracement is at 0.6452 a level the pair can hardly reach just with the job’s report. In the middle, the 0.6390 price zone stands at a static resistance area.

The pair has a near-term support area at 0.6230/40, with a break below the latter favoring a downward extension towards 0.6160. If the year’s low gives up easily, AUD/USD has room to extend its decline toward the 0.6000 psychological threshold in the next few sessions.

Share: Feed news

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

EUR/USD holds above 1.0700, eyes on Powell

EUR/USD holds above 1.0700, eyes on Powell

EUR/USD edged lower toward 1.0700 in the early European session but managed to hold above that level. As investors await speeches from ECB officials and FOMC Chairman Jerome Powell, the pair struggles to make a decisive move in either direction.

EUR/USD News

GBP/USD falls to fresh monthly low below 1.2000

GBP/USD falls to fresh monthly low below 1.2000

GBP/USD came under renewed bearish pressure and touched its lowest level in a month below 1.2000 on Tuesday. Despite the modest improvement witnessed in risk mood, the US Dollar holds its ground and weighs on the pair as focus shifts to FOMC Chairman Powell's speech.

GBP/USD News

Gold retreats below $1,870 as US yields rebound

Gold retreats below $1,870 as US yields rebound

Gold price erased its daily recovery gains and turned flat slightly below $1,870 heading into the American session. Following a downward correction earlier in the day, the benchmark 10-year US Treasury bond yield staged a rebound and caused XAU/USD to turn south ahead of FOMC Chairman Powell's speech.

Gold News

Will Bitcoin price test $20,000 again?

Will Bitcoin price test $20,000 again?

Bitcoin price shows clear signs of distribution occurring on the four-hour chart, which indicates the possibility of a trend reversal. Moreover, BTC has been consolidating for more than two weeks with no direction in sight.

Read more

Central banks, markets and the economy: Three times wrongfooted

Central banks, markets and the economy: Three times wrongfooted

In the US, financial conditions have eased in recent months and weighed on the effectiveness of the Fed’s policy tightening. Jerome Powell recently gave the impression of not being too concerned, so markets rallied.

Read more

Majors

Cryptocurrencies

Signatures