AUD/USD: All eyes on employment data
Aussie is grabbing all the attention this week as labour market data is expected to show the magnitude of the recession risk. Unemployment and wage growth are two of the most important factors that the RBA takes into account when cutting rates, as the latest figures may set more pressure on the Australian Central Bank.
Economists are forecasting a spike in unemployment to around 5.3%. Wages are not expected to change dramatically, as projections of the Wage Price Index (WPI) may be soft, with forecasts of a 0.5% wage growth in the spotlight.
With unemployment forecasted to tick up and wage growth to remain flat, trade tensions can be the straw that breaks the camel's back.
The newest tariffs imposed by Trump are already affecting key Australian exporting goods such as iron ore and wool. Iron prices, which is Australia’s top product regarding trade balance, registered two-month lows last week after the market sentiment hit hard the commodity market.
At the time of writing, AUD/USD is testing a key support zone at 0.6754. Last week, daily candles showed a clear rejection of the named demand zone, with the full entrance of the bulls around the 0.67000 psychological zone. Nonetheless, Monday’s trading sessions has pushed the price lower once again, with investors’ sentiment being driven by data expectations.
If prices bounce from the current area, then traders can easily see AUD/USD creating another leg to the upside (and respecting the descending channel formed since Dic 2018). On the contrary, if the support level does not hold, the channel will be invalidated and the next demand level would then be at 0.64173.