The AUDUSD pair dropped by more than 30 basis points after the Australian Bureau of Statistics (ABS) released ‘useless’ March employment numbers.
The headline numbers were better than what most analysts were expecting. The economy added almost 6,000 jobs in March, which was higher than the expected job losses of more than 40,000. The unemployment rate rose to 5.2%, which was also better than the consensus estimates of 5.5%. Similarly, the number of weekly hours worked was unchanged from the previous month while the participation rate was unchanged at 66.0%.
These jobs numbers were good in all aspects. They were relatively useless also. This is because the data did not capture the impact of the coronavirus-related weaknesses. According to the bureau, its analysts collects the data every first two weeks of the month. This means that the impact of the lockdown was not captured. In a statement, the bureau’s chief economist said that the real impact would be felt in the May report. 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,”
Indeed, the bigger picture is not pleasing. The country’s unemployment rate is expected to hit a 25-year high of 10% according too the country’s treasurer. He estimated that more than 1.4 million Australians will lose their jobs. This represents more than 5% of the country’s population. On a positive sign, the country’s government has started making plans to reopen the economy and the Chinese economy has started to recover.
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AUDUSD Technical Forecast
Looking at the daily chart, we see that the AUDUSD pair has been making a V-shaped recovery after hitting a low of 0.5510 on March 19. However, the recovery hit a barrier at the 61.8% Fibonacci Retracement level of 0.6445. It has now returned to the 50% retracement level of 0.6300.
This Fibonacci was drawn by connecting the highest and lowest levels in March.
Therefore, I expect the downward pressure to continue if the AUDUSD pair remains below the 50% retracement level. In this scenario, the next support level to watch will be the 38.2% retracement, which is close to the psychologically-important level of 0.6200.
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