The Australian dollar rose by more than 800 pips in one week. But AUD/USD could not tackle a strong resistance line, despite strong employment numbers. Is it time for a break? Or are these figures just a temporary improvement in a slowing economy?
Australia gained 20,400 jobs in September, more than double the early expectations for a rise of 10,100 jobs. The unemployment rate also provided a nice surprise: it fell from 5.3% to 5.2%. Is this enough?
An unemployment rate of 5.2% or 5.3% is envied by many countries. On the other hand, this drop comes on the background or two consecutive 0.2% rises in the rate. It stood on 4.9% for many months. It then rose to 5.1% in July and advanced to 5.3% in August.
Also the gain in jobs came on the background of a loss of 10,500 jobs in August and a smaller drop in July. Both indicators point to a correction now.
Sharp AUD/USD moves
AUD/USD dropped to just under 0.94 last week only to rise very nicely at the second part of the week. It then advanced on parity and pushed through on the third attempt, thanks to European hopes more than anything else.
When the Australian employment figures were released, the pair made another jump and peaked at 1.0231, shy of the 1.0254 resistance line. But it couldn’t advance further and dropped since then. For more technical lines, see the Australian dollar.
The drop in Chinese trade balance didn’t help either.
AUD/USD is a very volatile pair and gaining traction among forex traders. This relative stability isn’t likely to stay with us for a long time.
But were will it go? In the Q4 outlook, I point to the general direction – down. What do you think?
