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By HaleStewart January 16, 2014 1:24 pm
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Employment Report Miss Sends AUD/USD Lower

Yesterday, the Australian Bureau of Statistics reported that employment decreased by 22,600 between November and December of last year.  The consensus figure for this number was a gain of 15,400, making the released number a big shock to the market.

This comes amid the Australian economy trying to rebalance from one that derives a large amount of its growth from commodities exports to one more oriented to personal consumption and other internal growth sources.  The rebalancing is going a bit slower than the Reserve Bank of Australia wants.

As a result, the AUD/USD trade dropped sharply.  Let’s take a look at a few charts.

Starting with the weekly chart, prices are now in the middle of the “barbed wire” area between the 38.2% and 61.8% Fibonacci levels of the lows of 2009 and highs of 2011.  In addition, prices have dropped below the support established over the last few months.  The EMAs have become bearishly aligned as well; all the EMAs are moving lower and the shorter EMAs are below the longer EMAs.

Turning to the daily chart, we again see a bearish EMA aligning, along with a better and clearly picture of the trend support break from recent price moves.

The combined picture of both charts is bearish for the AUD/USD trade.

The RBA has been trying to talk the Aussie dollar down for the last few months, as their belief is the .90 level was still too high to allow the Australian economy to grow.  Recent economic developments are helping their cause.

Hale Stewart is a former bond broker who has been writing about economics and financial markets since 2006 on the Bonddad Blog.  He is also a tax attorney with a domestic and international practice while also forming and managing captive insurance companies for US companies.   You can follow him on twitter at:@captivelawyer

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