AUD/USD pops and drops on the way to 0.7650 on upbeat Aussie employment data

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  • AUD/USD reverses the initial jump despite strong Australia jobs report for May, defends 0.7600.
  • RBA’s Lowe reiterated the need for further stimulus, portrayed a more cautious mood.
  • Market sentiment dwindles amid a lack of major drivers after the Fed-led action.
  • US 10-year Treasury yields stay firmer, S&P 500 Futures remain depressed but DXY eases from the six-week top.

Despite a 10-pips of the pop-and-drop move by the AUD/USD pair on the Australia jobs report, the quote remains on the consolidation mode around 0.7630, up 0.33% intraday, during early Thursday. In doing so, the Aussie pair reacts to the US dollar moves while struggling to justify the RBA Governor Lowe’s comments and strong employment data at home.

Australia Unemployment Rate slumps to 5.1% versus 5.5% expected and prior whereas the Employment Change rally past +30.0K forecasts and -30.6K previous readouts to +115.2K during May.

Read: Breaking: Aussie Employment report is hugly bullish, sends AUD 20 pips highe roff the bat

In addition to the upbeat data, AUD/USD pair’s corrective pullback seems to take clues from the US dollar’s consolidation near the two-month high. That said, the US dollar index (DXY) eases from the highest levels since May 05, around 91.38 by the press time, as the US 10-year Treasury yield steps back from two-week top to 1.582%, up 1.3 basis points (bps) while consolidating the heaviest jump since early March. Even so, S&P 500 Futures extend the previous day’s bearish momentum while losing 0.50% to 4,192 by the press time.

Earlier in the day, RBA Governor Philip Lowe crossed wires, via Reuters, during a speech at the Australian Farm Institute Conference, in Queensland. Comments from RBA Chief sound sober of late as he pushed for the need for further easy money while citing inflation and wage growth concerns.

Read: RBA Lowe: Aussie economy needs stimulus

It’s worth noting that another round of arrests in Hong Kong and China’s military show in Taiwan, not to forget the US and the UK-backed move to push Beijing away exert additional downside pressure on the market sentiment, as well as on the AUD/USD prices.

On Tuesday, the US Federal Reserve’s (Fed) kept the monetary policy unchanged but upward revisions to economics and rate forecast triggered the market’s rush to the bonds and the US dollar. Additionally, Fed Chairman Jerome Powell accepted that the inflation run-up could be more consistent than earlier expected and weighed on the market sentiment, as well as on the AUD/USD prices the previous day.

Technical analysis

Having breached the ascending trend line connecting lows marked in mid-April and early June, around 0.7655, AUD/USD becomes vulnerable to test 0.7560-50 area comprising lows marked in February and March, also 200-day SMA, during the further weakness. It’s worth noting that June 03 low near 0.7645 guards the Aussie pair’s immediate upside.

 

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