The Australian dollar ran into all sorts of bearish trouble and sunk near an 11-year trough on Thursday as data showed a surprisingly sharp rise in unemployment which has added to the case for further cuts in interest rates, possibly as near as March or out to April. Not helping matters, China’s central bank also cut their interest rates too.
The AUD/USD pair delved as deep as US$0.6609 overnight, its lowest level since March 2009 – Yesterday, the People’s Bank of China lowered its benchmark lending rates to stimulate an economy threatened by the coronavirus outbreak.
Besides the coronavirus worries, the Australian dollar came unstuck when the Australian Bureau of Statistics (ABS) released the Unemployment rate, which edged up from 5.1% to 5.3% in January, (moving further away from the RBA’s desired level of 4.5%), even though, a better-than-expected employment number of 13,500 increase (forecast 10,000).
Furthermore, the number came as a result of 46,200 new full-time positions, and a decrease in part-time jobs of 32,700.
The Reserve Bank of Australia (RBA) has repeatedly said it would reconsider cutting rates again should the jobless rate trend higher in a meaningful way, although it would much prefer a period of stable policy.
Looking to the technical standpoint, yesterday’s sell-off has penetrated the US$0.6605-15 and now looks to US$0.6555 region, with the broader call holding to the region of US$0.6400.
Resistance is located from US$0.6645 minor, with US$0.6675-85 (news supply zone) viewed above.