AUD/USD Under Pressure as Aussie Fundamentals Fail to Improve
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- AUD/USD declines as economic data is released
- Reserve Bank Australia Rate Cut
AUD/USD declines as economic data is released
The Australian dollar depreciated sharply today against all other major currencies. This came as a result of the release of a set of important monthly economic data. Earlier today it became clear that the measured employment change for the country was -29.5K, which is still better than the expected -35.0K. Compared to the previous month (August), 111.0K new jobs were added to total employment.
Unemployment data reached 6.9%, beats expectations of 7.1% but higher than the previous month data of 6.8%. The heightened negative expectations both in employment change and the unemployment rate were emphasized by the recent second partial lockdown as Australia was one of the first countries to renew some of the restrictions and measures in an attempt to curb the second wave of coronavirus cases. Fortunately, the measures proved to have a positive effect and gradually cases started getting down to low double digits per day as the effect on the economy and the labor market was better than anticipated.
Reserve Bank Australia Discusses Rate Cut
The bearish sentiment stays predominant on Thursday as market participants also reacted to dovish comments by Governor Phillip Lowe of Reserve Bank of Australia. In his speech earlier, he noted the RBA is considering a rate cut as soon as next month as a step towards additional easing intended to aid the reopening of the Australian economy. According to Governor Lowe, the rate cut expectations would land the cash rate at 0.1% in November.
The selling pressure in the AUD/USD reached an intraday low of 0.7066 to currently trade along the same lines at 0.7075. The pair’s sell-off led to a two-week low today that breached the 100 SMA on the daily timeframe, extending the short-term downtrend that started on Sep 1 at a high of 0.7393, when the pair formed a double top followed by a sharp reverse.
In the medium term, however, we can read the last drop as a healthy correction to an uptrend that started at the bottom of the COVID-19 market sell-off on Mar 18 when the pair briefly traded at 0.5500, a level last reached on Nov 1, 2002.
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