AUD/USD: Aussie under pressure as Australia unemployment rate rises
- The AUD/USD pair is under pressure today after the latest Australian jobs data.
- The country's unemployment rate rose to 7.0% in October, better than the estimated 7.2%.
- The number of employed people rose by more than 174,000 in October.
The Aussie (AUD/USD) declined slightly after the Australian Bureau of Statistics (ABS) released the October employment numbers. The pair is trading at 0.7293, which is 0.65% lower than this month’s high of 0.7338.
Australia’s unemployment rate rises
According to ABS, the country’s unemployment rate increased from 6.9% in September to a July high of 7.0% in October. This happened as the country started to reopen after having restrictions in Victoria and Melbourne a month before. Economists surveyed by Bloomberg were expecting the rate to rise to 7.2%.
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In total, the number of employed Australians increased by 178,800 in October to 12.7 million. That was a 1.4% increase and a 1.0% decline on an annualised basis. At the same time, the number unemployed people increased by 25,500 to 960,000.
The rate of underemployment in Australia fell from 11.4% to 10.4% while the participation rate increased from 64.9% to 65.9%.
In the recent RBA interest rate decision, the members said that their baseline scenario was for the unemployment rate to rise close to 8% by December. That was an improvement from the previous estimate of a 10% unemployment rate.
The members also said that they expect the rate to remain above pre-pandemic levels for the next few years. Furthermore, the hospitality industry, which is a major employer in Australia will not make a comeback any time soon.
The employment numbers came a day after forex traders pushed the AUD/USD higher after the hawkish RBA minutes. In these minutes, the members said that they would not consider pushing interest rates negative.
On a positive note, the number of Covid cases in Australia has dropped sharply recently. Also, recent data from China, shows that the economy is doing better than earlier estimates. Australia is also member of the recently-signed Asian trade deal, which could help support the economy. Most importantly, commodity prices like copper and iron ore are rising, which is a good thing for the country’s economy.
AUD/USD technical outlook
On the four-hour chart, the AUD/USD reached a high of 0.7339 on November 9 this month and then pulled back. This week, the pair reached the same level and once again found strong resistance, leading to a double top. The price has also remained above the 100-day and 50-day moving average while the two lines of the stochastic oscillator are falling. Therefore, I expect that the pair will continue being under pressure until the stochastic and the RSI get to the oversold levels.