Buyers of the AUD/USD pair lost the battle again for the 73rd figure. Traders have been attacking this impassable level for almost two months now and it was only once that we were able to consolidate in this price area for just a few days. However, the bulls of the pair need to firmly settle above the level of 0.7350 to develop the upward trend and only in this case new price ranges will open for them.
At the beginning of this week, the Australian currency showed a bullish mood against the background of the weakening of the US currency and the optimistic rhetoric of the RBA. The minutes of the last meeting, released on Tuesday, were filled with optimistic theses that supported the AUD. The regulator made it clear that it will maintain a wait-and-see position in the near future, while the issue of raising the interest rate will not be considered "until progress is made towards full employment and inflation." That is, on the one hand, the Central Bank pause the issue of tightening monetary policy for a fairly long period, while on the other hand, it increased the importance of "Australian Nonfarms".
This is the reason why the pair's traders today reacted so sharply to the release of data on the growth of the Australian labor market. The reaction was negative, although almost all components came out in the "green zone". In this case, the problem is with the details – the structure of some of the published indicators disappointed investors.
But let's start with today's positive data. For example, the unemployment rate in August fell to 6.8%. This result is stronger than the pessimistic expectations of most experts who predicted growth to 7.7%. In addition, unemployment fell for the first time after four consecutive months of growth. It should be noted here that the figures released reflected the situation that has developed in Victoria, Australia. The Australian authorities introduced quarantine there at the end of July, gradually tightening restrictive measures up to the introduction of a curfew in Melbourne. Today's publication covers the period until the middle of the previous month, so it reflected the peak of the coronavirus outbreak in the country. The share of the economically active population has also grown. This indicator also found itself in the "green zone"
However, the structure of another indicator, which is the growth in the number of employees, disappointed traders, although it also came out better than expected. It would seem that the indicator showed strong dynamics. It grew by 111 thousand instead of falling by 40 thousand. Such a breakthrough was supposed to support the AUD, but as we take a closer look, it turned out that the growth in the indicator was primarily due to part-time employment, whereas full employment has shown a much more modest (half as much) result. The ratio of these indicators remained almost at the same level as a month ago. In August, the number of part-time workers rose by 76 thousand (in July, the indicator was at 80 thousand). On the other hand, full-time employment rose by 36,000 last month, and nearly 40,000 the year before. In this case, we can already talk about "unhealthy trends" in the labor market.
Let me remind you that the RBA reports have repeatedly indicated that as a rule, full-time positions offer a higher level of wages and a higher level of social security, compared to temporary part-time jobs. Therefore, the current dynamics is unlikely to please the members of the Australian regulator. Although the situation was even worse in the previous months: the full employment rate went "deeply negative" with the rapid growth of the unemployment rate.
In connection with such a controversial release, the Australian dollar lost its conquered positions and not only in pair with the US currency. The US dollar also added additional pressure, which has strengthened following the Fed's September meeting.
All this suggests that the pair's traders quite reasonably retreated from the borders of the 73rd figure. But this retreat should not be seen as a trend reversal. Firstly, today's release was controversial, but not a failure. The Reserve Bank of Australia also ignored the more dismal numbers, insisting that the country's economy is recovering at a stronger pace than earlier forecasts. Therefore, "Australian Nonfarms" will not become a reason for a large-scale weakening of the AUD. Secondly, the correction of the dollar is also temporary. Traders interpreted the split in the Fed's camp in favor of the dollar, but the results of the September meeting were essentially "dovish", since the regulator moved the date of a possible rate increase by another year – from the end of 2022 to the end of 2023. At the same time, the regulator changed the key wording of the accompanying statement, bringing it in line with the updated Fed strategy.
Technically, the current decline in AUD/USD can be considered as a reason to open longs with the main target of 0.7350. This target was repeatedly approached by the buyers of the pair, which failed each time. Therefore, we should be very careful in this price area.