11:14, 22 March

Remains Within Tight Range as Jobless Falls to 4.9%

In the last couple of weeks the AUDUSD has slowly but steadily climbed higher back above the current key level of 0.7050 and resumed its trading within its right range between 0.7050 and 0.7150. Just prior to this rally, the AUDUSD fell from near 0.72 down to its lowest levels in two months at 0.70 before the recent rally.
For the most part in the last two months, the AUDUSD has traded within a narrow range between 0.7050 and around 0.72, although it was met with some resistance around 0.7150 in the last few days.

In early February the AUDUSD fell back down to support at 0.7050 after meeting stiff resistance at the key 0.73 level, and it is currently relying on support from 0.7050 which has supported the currency pair several times and very well since October 2018. In the lead up to hitting resistance at 0.73 the AUDUSD rallied well to move past the key 0.7150 level and reach a two month high around 0.73 before easing lower. Just prior to the decline, the AUDUSD had done very well to rally from its lowest level in many years below 0.67 back up to above 0.7150 and beyond.

Interestingly, the AUDUSD has remained within a relatively tight range between 0.7050 and 0.73 for the last six months and it will be interesting to see if it makes a clean break one way or the other. The AUDUSD didn’t finish 2018 very well falling strongly throughout December to hit a three year low just below 0.7050 before dropping sharply down to below 0.67 and regaining lost ground just as quickly as it fell.

Australian unemployment has dropped below 5% for the first time in eight years, staring down a slowing economy.  In seasonally adjusted terms, the unemployment rate was 4.9%, its lowest level since June 2011.  When you dig deeper into the numbers, the decrease in unemployment was largely driven by fewer people looking for work, with the participation rate slipping.  Also the rate of job creation slowed with 4,600 new jobs over the month, a marked step down from the 39,100 jobs in January.  The underemployment rate, which is the measure of people in work but looking for more hours, held at 8.1%, while the underutilisation which combines unemployment and underemployment, eased marginally.  It is broadly accepted that the market is all but convinced that rate cuts are on their way, almost fully pricing in a cut by August.