AUD/USD extends gains as uptick in labor force participation lifts Australia’s jobless rate

• AUD/USD jumps over 10 pips after the upbeat Aussie labor market data. 
• The jobless rate ticked higher in July as more people joined the labor force. 
• The economy added a significantly higher number of jobs than expected. 
• AUD/USD’s immediate trend depends on the action in gold prices. 

The already bid AUD/USD is extending gains with the Aussie data painting a positive picture of the labor market. The currency pair is now trading at session highs above 0.7180, having added 10 pips following the release of the upbeat jobs report. 

Labor force participation increases

Australia’s unemployment rose to 7.5% in July, versus expectations for 7.8% and 7.4% previous. The smaller-than-expected rise is positive news. Also, the jobless rate ticked higher mainly due to an increase in the participation rate from 64% to 64.7%. 

What’s more, the economy added 114.7K jobs. The country was forecasted to have added 40K jobs following June’s 210.8K additions. Full-time jobs increased by 4.5K following June’s decline of 38.1K. 

All-in-all, the data is likely to quell fears of prolonged economic slowdown and keep the AUD better bid during the day ahead. Take note that the RBA has pledged to keep the policy accommodative until credible evidence of sustained improvement in the labor market and inflation emerges. 

The central bank foresees the unemployment rate rising to 10% later in 2020 due to job losses in Victoria and then gradually declining to around 7%. 

The gains in the Aussie dollar, however, will likely be reversed if gold comes under pressure. The yellow metal fell sharply from $2,075 to $1,863 in the last four trading days, helping the oversold greenback chart gains against major currencies. The AUD/USD pair also declined from 0.7243 to 0.7109 in the four trading days to Aug. 12, before recovering above 0.7150 during the overnight trade. Gold is currently trading around $1,938 per ounce. 

Technical levels