AUD/USD falls after Australia unemployment rate rises in March

The AUD/USD pair declined after the Australian Bureau of Statistics (ABS) released upbeat March jobs numbers. The data showed that the country’s job market remained steady before coronavirus restrictions started.

Australian dollar falls

Australia jobs data

According to ABS, trend employment increased by about 17,000 people in March. Most of these jobs, around 9,000, were full-time employees while about 8,000 were part time. As a result, the economy added more than 224,000 jobs in the past twelve months. This was a 1.8 per cent increase, which was slightly below the average annual growth of the past two decades.

The unemployment rate rose slightly to 5.2 per cent in March. This was better than the 5.3 per cent that most analysts polled by Bloomberg were expecting. The underemployment rate increased to 8.8 per cent from the previous 8.7 per cent. This rate measures the people of working age who want and are available to work for more hours.

The participation rate remained steady at 66.0 per cent, which is also better than the estimated 65.9 per cent. Meanwhile, the economy added about 6,000 jobs in March, bringing the total labour force to 13 million. The number of hours worked in the month also increased to 8.6 million.

While these numbers were impressive, Bruce Hockman, the Chief Economist, warned that they did not capture the full impact of the coronavirus lockdown. This is mostly because the survey is carried out in the first two weeks of the month. He said:

“Given the expected unseasonal change in key labour market indicators in the current COVID-19 context, the ABS will increase the focus on seasonally adjusted over trend data estimates for April and subsequent months.”

April numbers will likely be worse than those released today. Indeed, several big companies have started warning their employees of what to come. Recently, Crown Resorts warned that more than 18,500 jobs were at risk. The Australian Hotels Association has also warned that more than 250,000 jobs could be lost.

Hope from a distance

The Australian dollar has been upbeat for three main reasons. First, the Reserve Bank of Australia has offered a swift monetary policy response. It has brought interest rates to its lowest level in history and started quantitative easing.

Second, the Australian government has launched a massive fiscal stimulus program worth more than $189 billion. This package will help most companies deal with the crisis and maintain their workforce.

Third, data from China show that the country has bounced back from the crisis. The country’s manufacturing PMI from Caixin and China Logistics was above 50 in March. At the same time, the country’s exports and imports rose faster than expected in March. This is important because China is Australia’s biggest trading partner.

Finally, the government has started to open the economy gradually. This happened as the number of new coronavirus cases have declined. While Australia will go through a recession, these actions will help it recover faster.

AUD/USD technical forecast

The AUD/USD pair has been on an upward trend since March 19, when it was trading at 0.5500. The pair reached a high of 0.6452 yesterday. On the four-hour chart, the pair has found some significant resistance at the 78.6 per cent retracement level and is slightly above the 61.8 per cent retracement.

Meanwhile, the 14-day and 28-day exponential moving averages appear to be making a bearish crossover. Therefore, I expect the pair to remain bearish if it moves below the 61.8 per cent level of 0.6240. If it does this, it will then likely test the 50 per cent retracement at 0.6100.