Aussie dampened by labour market outlook
Posted by OFX
AUD – Australian Dollar
The Australian dollar drifted lower through trade on Thursday, following a dour unemployment print. At first glance numbers appeared promising with 114,000 jobs added to the economy and only a marginal uptick in official unemployment levels, but a deep dive into the specifics paints a gloomy picture. Of the jobs added to the economy over 60% were part time and suggest a growing underemployment concern. While hours worked are increasing there is still a large portion of the workforce seeking more and as COVID-19 hotspots delay the broader re-opening of the economy it is likely we will see depressed labour market numbers through the months ahead, especially as this reporting period has not taken into account Melbourne’s stage 4 lockdown. Having drifted below 0.7150 the AUD touched intraday lows at 0.7135.
Attentions remain squarely affixed to US Fiscal Stimulus negotiations and after another day without a compromise concerns a protracted stalemate could leave millions of Americans without benefits began to weigh on the USD. The AUD found support at 0.7130 and has struggled to extend back beyond 0.72 this week. Investors appear content maintaining current ranges ahead of any announcement in Government relief.
Key Movers
The USD fell through trade on Thursday, forced lower against a basket of major counterparts as Fiscal Stimulus negotiations remain at an impasse. It appears relief packages for the US Postal Service designed to shore up election infrastructure has emerged as a primary sticking point, the Democrats are desperate to sure up mail in voting avenues, a crucial source of votes in the Upcoming November election, while Trump has promised to block any funding that might facilitate mail in voting. As Democrats and Republicans squabble over partisan differences there is a growing concern the stalemate will add increasing pressure on consumption patterns and force the US into an even deeper recession. The Euro tested 1.18 while the Pound pushed back above 1.3050 amid rising hopes for a post Brexit trade deal. Comments from EU leaders, lead by the Irish Prime Minister suggest there is a “common landing zone” for trade negotiations. Despite shrinking by a record 20.4% in the three months to June 30 Sterling remains buoyed by broader USD weakness.
Attentions today remain with US lawmakers as markets seek any sign a deal can be struck and government relief issued.
Expected Ranges
AUD/USD: 0.7080 – 0.7240 ▼
AUD/EUR: 0.5980 – 0.6120 ▼
GBP/AUD: 1.8020 – 1.8480 ▲
AUD/NZD: 1.0820 – 1.0980 ▲
AUD/CAD: 0.9380 – 0.9520 ▼
Posted by OFX
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