Australian Dollar, AUD/USD, US Dollar, Unemployment, NZD/USD – Talking Points
- The Australian Dollar passed robust jobs
- The American dollar still dominates AUD/USD proceedings at present
- The dovish tilt of the RBA could be warranted by external factors
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The Australian Dollar rose after jobs came in above forecasts to match the lowest unemployment rate since the 1970s.
The unemployment rate dipped to 3.5% in February against the 3.6% predicted and 3.7% previously. 64.6k Australian jobs were added in the month, which was above the 50k forecast and -10.9k previously.
The tick-up in AUD/USD comes after a whiplash week ahead of developing turmoil across global markets. The price action reflected the rotations seen in the US dollar after the collapse of three US regional banks and now the pressure appearing on Republic Bank and Credit Suisse.
The renewed tension in the labor market comes after the RBA took its foot off the pedal in its inflation battle by taking a dovish tilt earlier this month.
The interest rate market is leaning toward no change in the official cash rate next month. If that happens, it will be the first time since April last year that the bank has not raised rates at its monthly monetary policy meeting.
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How to Trade AUD/USD
Given the current situation in global markets, it seems as if a lot of water will pass under the bridge before the next meeting. There remains a significant degree of uncertainty about the consequences of the failure of the American banks
Although the Australian economy is heating up, the wider implications of tightening global financial conditions for risk assets would seem likely to impact Australia at some stage.
Across the Tasman Sea earlier today, New Zealand’s GDP came in lower than expected and opens up the island nation’s likelihood of going into recession. Fourth quarter GDP was -0.6% quarterly rather than -0.2% forecast and 2% previous. The annual reading was 2.2%, well below the 3.3% forecast and 6.4% previously. This saw NZD/USD drop half a cent, but it recovered much of this in the aftermath. The Kiwi may have been helped by Fonterra, New Zealand’s largest company, announcing a 50% increase in profits from this time last year.
AUD/USD TECHNICAL ANALYSIS
AUD/USD closed outside the lower band of the 21-day Simple Moving Average (SMA) based Bollinger Band last week before closing back into it to set up a rally to this week’s peak of 0.6717.
That high could provide resistance before the previous peaks and break points of 0.6784, 0.6856 and 0.6916.
The price is currently below all periodic SMAs and this may suggest that bearish momentum could develop. With the exception of the 100-day SMA, all SMAs have a negative gradient. If the slope 100-day SMA turns negative, it could confirm emerging bearishness.
Supprt on the downside could be at the previous lows and breakout points of 0.6565, 0.6548, 0.6387, 0.6272 and 0.6170.
— Written by Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel through @DanMcCathyFX on Twitter