The AUD/USD pair has been experiencing a high degree of volatility in recent times. On Thursday, the soft Australian jobs report showed a job decline of 11.5k, which was better than analysts expected decline of 19k.
This news caused the AUD to weaken, accompanied by an increase in the unemployment rate by 0.2% to reach 3.7% in January. The bearish move saw the price of the AUD/USD pair slide to the 0.68706 territories, where it found support in the Asian session.
Australian Soft Jobs Report
The soft jobs report has been a major concern for the Australian economy, leading to downward pressure on the AUD/USD pair. The weakness in the labor market has been attributed to several factors, including the ongoing impact of Russia-Ukraine, the high Australian dollar, and the recent tensions between the world’s superpowers, The U.S. and China.
In addition, the Reserve Bank of Australia has been facing challenges in implementing monetary policies to support economic growth due to the low-interest rates. The job decline has also impacted the unemployment rate, which has risen to 3.7%.
This rise is a significant increase from the previous month’s rate of 3.5% and has added to the concerns about the overall state of the Australian economy. However, investors should note that the rate is still relatively low compared to other major economies and is within the Reserve Bank of Australia’s target range of 4.5%.
The 200 Moving Average Analysis
The run of the 200 moving average has presented a challenge for buyers who attempted to enter the market following the soft jobs report. The moving average has acted as a significant resistance level, with sellers inclined toward it.
This movement has caused a reversal in the pair’s action, with buyers turning into sellers and pushing the price to a low of 0.6842 on the chart. In addition to the soft jobs report, a stronger-than-expected US PPI report has also impacted the AUD/USD pair.
This report has suggested that more inflation will likely occur, which has given the pair another problem to contend with and handle. Although the price did retrace above the support level, the highs have declined, and sellers remain in charge of the market.
The 200 moving average has been critical for the AUD/USD pair and has significantly shaped the pair’s price action. Following the soft jobs report, buyers attempting to enter the market faced significant resistance at this level. The sellers could take advantage of this and push the price lower, resulting in reversing the pair’s action.
Philip Lowe On Inflation
RBA Governor, Philip Lowe, has emphasized the importance of containing inflation and ensuring it returns to the 2% target. However, inflation can be very corrosive and quick to cause damage to the economy, and if left unchecked, it could lead to significant problems in the coming months.
He believes the path to containing inflation is narrow, and everyone must play their part in achieving this goal. The RBA has indicated that they are prepared to do whatever it takes to support the economy and ensure that inflation remains under control. These measures include implementing monetary policies such as adjusting interest rates, which could affect the AUD/USD pair.
