Aussie falls on disappointing jobs numbers

Latest figures for the month of January showed a dismal performance in the Australian job markets as the economy saw -12.2k jobs against expectations for a decline of -4.7k. The unemployment rate also dipped further in the red, rising to 6.4% from 6.2% expectations and 6.1% improvement last month. The rise in unemployment to 6.4% marks one of the highest unemployment rates in Australia in the last 13 years

There was a bit of improved revisions to the previous month’s data as the employment change was revised upwards to 42.3k from 37.4k as previously reported.

The Aussie was under sharp selling pressure, which looked considerably weaker for most of this week. AUDUSD declined from the opening highs at 0.7729 to fall to lows of 0.765 within a span of a few hours after the jobs report was released.

The disappointing jobs data coupled with a stubbornly high unemployment rate is likely to add to the dovish view of the RBA in the coming months with further pressure for rate cuts on the horizon.

Ahead of the jobs report, RBA Assistant Governor, Guy Debelle was delivering his speech at a conference hosted by FX Week. There were no inferences to the RBA’s monetary policy however.

Economists in general are expecting to see a spike in unemployment rate touching as high as 6.5% by mid 2016 before stabilizing.

The current lows in the Aussie come at a previously held support level of 0.76618 levels. A turnaround from this support could be well expected as long as price doesn’t fall below 0.76262 levels. However, we would need to see a break out to the upside as a follow through, above previously held higher close near 0.7839, which could then set the stage for the AUDUSD to test the next high at 0.8 levels.

The falling price channel depicts the bearish trend in the Aussie and also highlights the major support level that the pair is trading at currently. Therefore, as an added confirmation, we would need to also see a break out from the falling price channel before looking for further upside gains.

The Aussie dollar could see some volatility today as the US will be reporting its monthly retail sales data, which is currently tipped to the downside.

From the longer perspective, the weekly charts printed a small bodied candlestick last week, while the daily charts have shown a decline in AUDUSD since Tuesday this week after turning bearish on a few indecision candlesticks, pointing to further downside declines on the cards. In this aspect, the analysis mentioned off the H4 charts will be interesting to watch as a clean break below current support levels will pave way for more declines.