The Australian dollar paired with the US currency is again trying to conquer the 72nd figure today. Having pushed off from the low of 0.6969 at the end of January, the aussie was stuck in a wide price range, which subsequently narrowed to the 0.7100-0.7250 range. Over the past three weeks, traders have repeatedly crossed the 0.7200 level, but they have not been able to gain a foothold in the area of the 72nd figure. As soon as bulls crossed the 0.7250 target, the upward momentum gradually faded: bears intercepted the initiative, pulling the aussie back into the echelon.
In most cases, the growth of AUD/USD is due to the weakness of the US currency – the aussie, as a rule, does not have its own arguments. But today, against the background of the uncertain positions of the greenback, the Australian dollar is growing for "its own" reasons. The aussie was supported by data on the growth of the Australian labor market, which was published during the Asian session on Thursday. It cannot be said that the figures turned out to be a "breakthrough" – but rather, market participants were not disappointed by it, thereby preserving the hope for an early increase in the interest rate. Looking ahead, I note that in my opinion, the hawkish expectations of some experts are unjustified: they insist that the increase in inflation in the first quarter of this year will "force" the central bank to increase the rate this summer. Such conclusions are very hasty, at least because wages in Australia do not "run after inflation." This fact worries the members of the Australian central bank, as they stated at the last meeting of the Reserve Bank of Australia.
Supporters of the hawkish scenario point to a recent speech by RBA Governor Philip Lowe in the national parliament, as he stated that he considers it "quite possible" to raise the rate "later this year" (earlier he spoke about the extreme improbability of such an option). This is a phrase taken out of context that helped AUD/USD bulls develop another wave of corrective growth. After all, in fact, Lowe indicated that he would consider this option if "economic indicators demonstrate stable growth." And then he complained that Australian companies are "reluctant to raise wages." In addition, the head of the RBA noted that before making a decision on the interest rate, he would like to see "several inflation reports on the growth of the consumer price index." This is quite an interesting statement, given the fact that the above reports are published in Australia once a quarter. Lowe had previously repeatedly advocated the option of monthly releases, however, as they say, "who is still there."
Thus, it is impossible to talk about Lowe's hawkish attitude at the moment: having allowed the option of raising the rate this year, he voiced too many "buts" and too many "ifs" at the same time. In addition, the rest of the RBA members mostly remain cautious.
But back to the "Australian Nonfarm". In fact, despite the general optimism, the latest release of data on labor market growth left a mixed impression. On the one hand, the unemployment rate remained at 4.2% (the indicator was released at the same level in January). This suggests that unemployment has remained at the level of multi-year lows – the last time the indicator was in this area was in August-September 2008. However, on the other hand, a rather weak 13,000th increase in the number of employed was due solely to the growth of the part-time component. While the full employment component turned out to be in the negative area. The RBA reports have repeatedly indicated that full-time positions tend to offer a higher level of salary and a higher level of social security, compared with temporary part-time jobs. Therefore, today's growth in the number of employed cannot be viewed exclusively in a positive context.
All this suggests that the February release will not be the starting point for a trend reversal. Moreover, the "Australian Nonfarm", most likely, will not help the aussie even gain a foothold in the area of the 72nd figure. As soon as the US currency starts to gain momentum again, the bears will return AUD/USD to the level of 0.7200.
It should also be noted that the current growth of the Australian currency is also due to the craving for risky assets. The fact is that the Russian Ministry of Foreign Affairs just published the text of its reaction to the US response regarding the so-called security guarantees offered by Moscow. In particular, the text states that there is no "Russian invasion" on the territory of Ukraine "and is not planned." This phrase has become a key one for traders of the foreign exchange market: the dollar was under pressure, and risky assets began to be in high demand.
Although in fact, the situation around Ukraine remains tense, and Western media are still talking about a possible invasion. The Kremlin insists on all its previous demands and invites Washington to work together to develop a new "security equation". Given the fact that the parties have so far found a common denominator in key issues, the option of further escalation of the situation cannot be ruled out. Therefore, the "geopolitical factor" is a weak and unreliable ally of the aussie.
Thus, in my opinion, the corrective growth of the AUD/USD pair is limited by the "ceiling" of 0.7230. This price point corresponds simultaneously to the upper line of the Kumo cloud and the upper line of the Bollinger Bands indicator on the daily chart. If the pair fails to gain a foothold above this target (or if the northern momentum begins to fade in this price area), it is advisable to consider the option of short positions with the first target of 0.7130 - this is the average line of the Bollinger Bands on the same timeframe.