Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.7200.
- Add a stop-loss at 0.7400.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.7350 and a take-profit at 0.7450.
- Add a stop-loss at 0.7300.
The AUD/USD pair declined slightly during the overnight session after the relatively weak Australian jobs numbers. The market also reacted to the potential tensions between Australia and China. It is trading at 0.7330, which is slightly below this week’s high of 0.7350.
Australia Jobs Data
The impacts of the recent lockdowns on Australia’s labor market were revealed on Thursday. The data, by the Australian Bureau of Statistics, showed that the country lost more than 146k jobs in August after adding 2.2k in the previous month. These job losses were significantly higher than the median estimates of 90k.
The country’s participation rate also declined from 66.0% to 65.2%, which was lower than the median estimate of 65.7%. On the positive side, its unemployment rate declined from 4.6% to 4.5%. These numbers show that the impact of the recent lockdowns in New South Wales and Victoria, states that account for more than 50% of the country’s GDP.
Still, there is a possibility that the situation will change as the two states start easing their lockdowns. The Victorian government announced that it will reopen now that it has vaccinated about 70% of the population.
The AUD/USD also reacted to the latest trilateral deal between Australia, US, and the UK. The deal will enable Australia to build its nuclear-powered submarines in a bid to counter China. These vessels will be faster and more stealthy than conventional submarines. The deal could anger China, which buys a vast amount of Australian goods.
Later today, the AUDUSD will react to the latest American retail sales numbers. The data is expected to show that the country’s sales declined in August as high costs discouraged purchases. The US will also publish the closely-watched initial jobless claims and Philadelphia manufacturing index.
AUD/USD Technical Analysis
The AUD/USD pair tilted lower in the overnight session. On the four-hour chart, the pair moved slightly below the neckline of the double-top pattern at 0.7345. It also moved below the Ichimoku cloud and the 25-day moving average. It has also formed what looks like a small bearish flag pattern while the MACD moved below the neutral level.
Therefore, the pair will likely maintain a bearish trend in the near term, with the next key level to watch being at 0.7200. On the flip side, a move above 0.7350 will invalidate this view.
