AUD/USD struggles to gather upside traction as Aussie jobless rate rises

  • AUD/USD trades in the red near 0.6995 on dismal Aussie jobs report. 
  • Australia’s jobless rate ticked higher to 7.4% and full-time jobs tanked. 
  • The Sino-US tensions keep risk appetite under pressure. 

The AUD/USD pair is struggling to draw bids as Australia’s jobless rate ticked higher in June and full-time employment tanked. The pair is currently trading in the red at 0.6994, having hit a high of 0.7012 before the release of the jobs data. 

Australia’s jobless rate rose to 7.4% as expected, having increased to 7.1% in May from 6.4% in April and the participation rate rose to 64% versus expectations for 63.6% and 62.9% previous. 

Indeed, the Australian economy added 210.8K jobs in June compared to expectations for 112.5K additions, having shed 227.7K jobs in May. However, full-time employment fell by 38.1K following an 89.1K drop in May. 

The weak data validates RBA’s dovish stance on interest rates. The policymakers clarified in July’s meeting that the cash rate will remain flat until progress is made towards full employment and inflation is within the 2%-3% target.

The uptick in the jobless rate coupled with the escalating tensions between the US and China could keep the Aussie dollar under pressure during the day ahead. US President Donald Trump, on Tuesday, signed an executive order to shun Hong Kong’s special trading status and threatened additional steps that got the expected response from China.

As per the latest reports, the US is said to be weighing a sweeping travel ban on Chinese Communist Party members, a move that is likely to prompt sharp retaliation. 

The S&P 500 futures are flashing red at press time, a sign of impending risk aversion, that could add to bearish pressures around the Aussie dollar. It seems the optimism generated by the news of coronavirus vaccine has faded. 

Technical levels

 

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