The June Australian Dollar futures contract is trading nearly 1 percent higher against the U.S. Dollar after the release of data that showed the country’s unemployment rate unchanged from February at 5.2 percent. The number of jobs added was much stronger than expected and is helping to set the tone for a “risk on” trading day.
The overnight surge in the Australian Dollar was triggered after data showed that employers added almost seven times the number of workers in March than forecast. Australia’s bonds fell, pushing all government debt yields below their three-month averages. This action helped ease prospects the Reserve Bank of Australia will cut interest rates at its next meeting in May.
Pre-report estimates had Australian payrolls increasing by 6,500, but the report surprised traders by rising 44,000. In addition, the jobless rate held steady at 5.2 percent, compared with early estimates of 5.3 percent. The strength of the report put an end to talk that the RBA would need to cut interest rates by 50 basis points in an effort to revive the economy.
Overnight, the Daily June Australian Dollar confirmed Wednesday’s closing price reversal bottom, setting up a minimum 2 to 3 day rally into at least 50 percent of the break from 1.0720 to 1.0150 at 1.0435.
If the Australian Dollar reaches this short-term objective then the main trend will turn up since the main top at 1.0380 will have been crossed in the process. Standing in the way of a straight shot into the retracement level is a downtrending Gann angle at 1.0410 today.
If upside momentum is strong and supported by rising volume and volatility then investors are likely to buy with more conviction since they will be driven by the clarity generated by the strong jobs report. It’s too early to get bullish about the Aussie yet, but the groundwork has been laid for the start of a meaningful rally.
