- Australia is foreseen recovering over 110K job positions in June.
- Wage growth in the country will likely remain depressed until mid-2021.
- AUD/USD is bullish on sentiment, employment data would have a limited effect on it.
Australia is scheduled to release its June employment data this Thursday, and the country is expected to recover 112.5K jobs in the month, after losing 227.7K positions in May and roughly 600K in April. The unemployment rate, however, is seen rising to 7.4% after jumping to 7.1% in the previous month and almost two-decade high.
Relief to be only temporal
As it happened worldwide, the setback in employment figures was the result of the ongoing coronavirus pandemic. Australia was enjoying some relief after the initial hit, as it seemed to have the illness under control. The country reopened ahead of other countries, which could lead to an upward surprise in jobs’ creation. However, authorities have to reimpose restrictions and lockdown larger parts of the economy around Melbourne to contain the latest outbreak. The negative effects of this last decision on employment figures will probably be clearer in the next two months.
Australian wage growth is released quarterly and apart from the monthly employment report. The latest data available shows that the wage price index rose by 2.1% YoY in the first quarter of 2020, slowing from 2.2% in the previous quarter. Experts expect nominal wage growth could slow to below 1.0% throughout the rest of 2020 and the first half of 2021.
Meanwhile, the RBA has had a monetary policy meeting, leaving the cash rate at record lows as the ongoing crisis will continue to affect RBA’s employment and inflation targets. Rates would remain unchanged for “some years to come,” according to Governor Lowe. However, policymakers have clarified that they stand ready to provide additional support to the economy.
AUD/USD possible scenarios
In the meantime, financial markets trade alongside sentiment. The AUD/USD pair has been ranging for almost a month amid the uncertainty surrounding the economic future, with speculative interest seesawing between hopes and fears.
The pair is currently at the upper end of its latest range above 0.7000, as optimism rules after Moderna reported its vaccine has provided immunity in phase one tests. Coronavirus-related headlines trigger much more interesting movements among currencies than macroeconomic data.
Nevertheless, an upbeat outcome will likely fuel the ongoing rally in AUD/USD. The immediate resistance and critical level to surpass is 0.7063 the high set last June. Beyond it, the advance could continue towards the 0.7100 figure. Further gains will depend on the market’s sentiment.
An immediate short-term support level comes at 0.6990, with a break below it on a dismal employment report exposing the 0.6940/50 price zone. Seems unlikely that the pair could lose the 0.6900 level in the current risk-on scenario, no matter how terrible employment data could be.
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.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800, as traders lack directional impetus amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold ends Q1 2024 at record highs, what’s next?
Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.