AUD/USD drops following higher than expected Aussie Unemployment Rate

• AUD/USD fails to cheer an increase in Employment Change.
• Uncertainty surrounding China’s coronavirus, broad US dollar strength played their role previously.
• The latest numbers from Hubei follow re-revised guidelines and mark a sharp decline in infected cases.
• PBOC interest rate decision, coronavirus headlines will be the keys to watch ahead of the US data.

AUD/USD declines to 0.6678 after flashing the intra-day low of 0.6668 as Australia’s employment data disappoints Aussie traders on early Thursday.

Aussie employment data disappoints…

Australia’s January month employment data suggest the headlines Employment Change rose well beyond 10K to 13.5 whereas the Unemployment Rate also increased by 5.3% against 5.2% expected. Further details indicate that the Fulltime Employment and Part-Time Employment levels registered mixed play with the former rising from -0.3K to 46.2 while the latest declining from 29.2K to -32.7K. Additionally, Participation Rate inched up to 66.1% from 66.0% prior and expected.

Read: Breaking: Bullish Aussie Unemployment Rate back to 5.3% vs 5.2% expected, AUD slides

During Wednesday, the fourth quarter (Q4) employment data from Australia remained unchanged to 0.5% and 2.2% on QoQ and YoY respectively. However, the RBA seems to have been bullish on its employment fundamentals and hence today’s data renewed the call for the RBA's rate cut in upcoming meeting.

Risk reset, USD pullback triggered the earlier U-turn…

Having been the victim of broad US dollar strength and uncertainty surrounding China’s coronavirus, the Aussie pair pulled back during the early Asian session.

The reason could be traced from a surprise decline in coronavirus infected people from Hubei, the epicenter of the deadly disease, to 349 from 1,693 by the end of February 19. However, details suggest that the re-revised guidelines for reporting now omit the category for cases clinically diagnosed with CT scans while counting only confirmed cases.

It should also be noted that the US dollar pullback might as well be considered as a catalyst for the day-start recovery.

Even so, China’s Global Times (GT) cited the Hubei government’s inability to have the exact numbers as well as reaching to the people on-time and highlight the risk from the epidemic.

While portraying the risk-tone, the US 10-year treasury yields extend their previous run-up to 1.581% while stocks in Australia and Japan, as well as S&P 500 Futures, remain positive.

Looking forward, the People’s Bank of China (PBOC) is expected to deliver its Interest Rate decision on 01:30 GMT. The Chinese central bank is widely expected to announce a cut to its benchmark rates following the early-week action of slashing the range of policy rates.

After PBOC’s rate decision, the US economic calendar will be awaited for fresh impulse. However, coronavirus updates will keep the driver’s seat.

Technical Analysis

Unless successfully breaking below 0.6660, prices are less likely to aim for 0.6600 and early-February 2009 tops near 0.6545. As a result, buyers can look for entry beyond short-term falling resistance line, at 0.6715 now.