During the Asian session on Thursday, key labor market data for Australia was published. Buyers of AUD/USD reacted positively to this report, as almost all of its components were either in the "green zone" or at the forecasted levels. However, the release has its flaws, which we will discuss shortly, but overall, the publication favored the Aussie. The Australian dollar paired with the U.S. dollar reached a weekly price high, marking 0.6460. However, the upward momentum quickly faded: the price didn't even test the nearest resistance level at 0.6490 (the Tenkan-sen line, coinciding with the upper Bollinger Bands line on the daily chart), which indicates indecision among AUD/USD buyers.
Now, to the Australian jobs report. Today, it was announced that unemployment in August remained at the July level, which is 3.7%. Since November of last year, this indicator has fluctuated in the range of 3.5% to 3.7%, so the August result did not surprise or disappoint investors. It's worth noting that in pre-pandemic times, that is, before the coronavirus pandemic, this indicator remained in the range of 5.0% to 5.3% for many months. Therefore, it can be said that the labor market has not only returned to pre-crisis levels but has also settled below the low levels.
Also, attention should be paid to the rise in the number of employed. The overall component came out in the "green zone," exceeding the forecasted values. The indicator reflected an increase of 64,900 against a forecasted growth of only 26,000. On one hand, this is a remarkable result, the best since May of this year. However, on the other hand, this component of the report has a serious flaw, which lies in the negative balance of strong growth in part-time employment against weak growth in the number of full-time job vacancies.
The structure of the overall indicator indicates that the growth was driven by an increase in part-time employment, while full-time showed a very weak result (the ratio is 62,100/2,800). It is known that permanent positions typically offer higher wages and a higher level of job security compared to temporary gigs. Therefore, the current trend in this regard is quite worrisome, even despite the strong overall result. Moreover, a similar pattern was observed in the previous month: the part-time employment component exceeded the full-time employment component.
In summary, on one hand, Australia's labor market demonstrated a decent result—the unemployment rate is within the norm, the share of the economically active population has increased to 67.0% (the best result in the history of observations, mind you), and the number of employed has risen by almost 65,000. The only drawback is the weak growth in the number of full-time job vacancies. Overall, the Australian labor market displayed its positive qualities, allowing AUD/USD buyers to anticipate a more hawkish stance from RBA members.
In particular, according to currency strategists at Commerzbank, if inflation unexpectedly accelerates in August, another interest rate hike in November will not be so unlikely. We are talking about inflation data, which will be released at the end of September.
However, this hypothetical assumption will have no impact on the Australian dollar. Today's weak rise in AUD/USD is eloquent evidence of that. Recall that the results of the September meeting of the Australian regulator (which took place last week) put pressure on the Aussie, as the central bank did not present any hawkish surprises. On the contrary, the central bank confirmed its wait-and-see stance, using fairly vague wording regarding the further prospects of monetary policy tightening. In particular, the regulator pointed to increased uncertainty regarding the Chinese economy, citing it as a factor "affecting the growth outlook of the Australian economy." Additionally, the RBA mentioned that it would take into account the cumulative extent of monetary policy tightening and the lagged effects of monetary policy, as well as monitor the dynamics of key macro indicators, especially in the field of inflation.
All this indicates that the Australian dollar will continue to trade within the realm of the U.S. dollar, which, in turn, is awaiting the Federal Reserve meeting (September 19 and 20). The inflation growth data released yesterday in the United States turned out to be quite contradictory (an increase in the overall CPI, a decrease in the core index), causing traders of dollar pairs to freeze in anticipation of the Fed's verdict, to understand whether the glass is half full or half empty.
From a technical perspective, the AUD/USD pair on the daily chart is positioned on the middle line of the Bollinger Bands indicator, reflecting indecision between bulls and bears. Selling should be considered after the price falls below the level of 0.6410 – in this case, the target for the downward movement will be 0.6360 (the lower Bollinger Bands line on the D1 timeframe). Buying is more complex—in my view, long positions can be considered only after the pair surpasses the resistance level of 0.6490 (the Tenkan-sen line, coinciding with the upper Bollinger Bands line on the daily chart). In this case, the target for the upward movement will be the 0.6550 mark.