Australian Dollar In The Hot Seat
Joe Perry | Nov 13, 2019 05:12PM ET
Australia's employment data for October was due Wednesday evening and the unemployment rate was expected to downtick from 5.3% in September to 5.2%. However, the key figure is the employment change, which was expected to increase by 18,000 jobs in October vs. an increase of 14,700 in September. Australia does something nice for us; they breakdown the headline number between full-time jobs and part-time jobs. This distinction gives a clearer picture of how the overall job market is doing. Expectations for October were for an increase of 34,000 full-time jobs and a decrease of 16,000 part-time jobs. These expectations were both better than September’s numbers. If the numbers come out as expected, full-time jobs will be increasing and part-time jobs will be decreasing MoM. Australia could use some positive data, as the U.S.-China trade deal headlines have mainly been the driver of the Australian Dollar. Earlier Wednesday, “sources” said that U.S.-China trade talks have hit a snag.
AUD/USD has closed down the last 4 days (although the range has only been about 80 pips over that period). Recent highs were near horizontal resistance at .6913. The pair spiked through that level 4 days in a row earlier this month, however could not close above the resistance. Perhaps that was because of the downward sloping trendline near .6935 and the 200-day moving average at .6942. Could the employment data be the catalyst to reverse that and help propel the pair to new highs?
Source: Tradingview, FOREX.com
On a 240-minute timeframe, AUD/USD is trying to hold the bottom trendline of rising channel near .6832. This price coincides with the 38.2% Fibonacci retracement level from the lows on October 2 to the highs on October 31. If price breaks lower, first support is horizontal support near .6810 down to .6800, which is the 50% retracement of the previously mentioned timeframe. This is also a psychological support level, as it is a nice round number (which markets seem to pay attention to). There is a falling wedge within the channel that has formed on the 240-minute chart. If price breaks out to the top side, the target for the breakout of a falling wedge is a 100% retracement, which would be right at the horizontal resistance on the daily timeframe at .6913. Above that, watch for the resistance levels mentioned on the daily timeframe.
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Source: Tradingview, FOREX.com
Make sure to dig deeper into Australia's headline employment data and look at the number of full-time jobs created vs. the number of part-time jobs created. The difference could be the reason AUD/USD goes bid or sells off.
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