- Last month election couldn’t offer an expected decline in the Australian unemployment rate while employment change managed to cross forecast.
- Risk events concerning global politics and trade may offer fresh impulse for now.
With the headline unemployment rate lagging behind market consensus, AUD/JPY slumped to a fresh intra-day low near 75.00 during early Thursday.
Australia’s May month employment report flashed mixed signals. The headline unemployment rate rose past 5.1% forecast to match 5.2% previous whereas employment change grew beyond 17.5K market consensus and 28.4K earlier to 42.3K. Further, the participation rate surged to 66.00% from 65.8% expected and prior.
The long-lasting US-China trade tussle continues to steal the show while negatively affecting the global risk sentiment. Neither the US President Donald Trump’s tweet nor Chinese media could signal that upcoming trade talks between the world’s top two economies are going to be easy at the sidelines of the G20.
Global risk barometer, the US 10-year treasury yield, lost nearly 2 basis points to 2.12% by the end of Wednesday and has been moving around the same since early morning in Asia.
While the increase in the unemployment rate has been the concern of the Reserve Bank of Australia (RBA), the Australian Dollar (AUD) may remain under pressure with bears expecting another rate cut soon. However, political plays can offer intermediate moves to the pair and shouldn’t be ignored.
Technical Analysis
With the three-week-old descending channel gradually grinding the quote downwards, latest low of 74.96 and the channel support of 74.70 seem crucial for short-term sellers ahead of highlighting July 2016 low at 74.50 and the year 2016 bottom nearing 72.40/45.
If prices manage to sustain a break of 75.63 mark comprising 21-day simple moving average (SMA), the channel resistance of 75.83 can question buyers, which if conquered could further escalate the rise in the direction to the May 20 high near 76.40 and 77.00 numbers to the north.
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