Don't Give Up Aussie! AUD Lost Over 1% On Tuesday. Australian Dollar Was Affected By Situation In China

The Australian dollar edged lower following today’s Australian employment report but has reversed directions. In the European session, AUD/USD is trading at 0.6957, up 0.28%.

Australian employment report disappoints

Australia released the July employment report, and the numbers were surprisingly soft. The economy lost 40.9 thousand jobs, well below the estimate of 25.0 thousand. This follows a strong gain of 88.4 thousand in May. Making the report sting even more, full-time positions fell by 86.9 thousand. The silver lining was a drop in the unemployment rate to 3.4%, down from 3.5%. However, that was likely due to the participation rate falling to 66.4%, down from 66.8%. The Australian dollar lost ground following the job report release but has reversed directions.

The Aussie tumbled 1.23% on Tuesday, as ominous developments in China are weighing on the currency. The latest news was the Chinese central bank lowering its 1-year MLF loans to 2.75%, down from 2.85%. The spike in Covid cases and the worsening property crisis have resulted in a decline in credit growth, and the PBOC has loosened policy in an effort to boost credit demand. The Aussie is sensitive to developments in China, which is Australia’s number one trading partner.

The RBA meets next on September 6^th and another rate hike is likely, even with the weak job report. The markets have priced in a 25 basis point hike, which would bring the cash rate to 2.10%. The RBA minutes, published on Tuesday, indicated that further rate hikes were coming, but reiterated that the Bank would be guided by economic data and the inflation forecast.

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AUD/USD Technical

There is resistance at 0.7053, followed by a monthly resistance line at 0.7122
AUD/USD has support at 0.6968 and 0.6902

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Aussie bounces back after soft jobs report - MarketPulseMarketPulse

Craig Erlam

Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.

Don't Give Up Aussie! AUD Lost Over 1% On Tuesday. Australian Dollar Was Affected By Situation In China - COVID And Monetary Policy

Craig Erlam

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