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The Australian unemployment rate unexpectedly dropped. Together with less fear from Europe, the Aussie is making a nice recovery after taking a hit by the Non-Farm Payrolls. Update on jobs and on AUD/USD technicals.

Australian job figures were a great surprise: 26,900 jobs were gained last month, higher than the 20K gain that was predicted. This surprise followed last month’s great gain of 35,300, which was also revised to the upside.

A bigger surprise was seen in the unemployment rate – economists expected it to remain unchanged at 5.4%, but it fell to 5.2%, the low level already seen in February. The drop would stronger if the population wouldn’t be growing so fast. A gain of 2.9% was also recorded in the amount of worked – very impressing figures indeed.

All this positive data puts pressure on the central bank – the RBA paused last week, leaving the interest rate unchanged at 4.5%, after 6 rate hikes. No further hikes were expected in 2010. The strength of the economy, as seen in the job market, could lead to rising inflation and to another rate hike in 2010.

AUD/USD jumps

The Australian dollar traded at 0.8270 before the release, and now trades at 0.8370, a rise of 100 pips. It already struggled with 0.84. The next line of resistance is at 0.8477, which was a line of resistance last summer.

Even stronger resistance is found at 0.8567 – this worked as a clear line of support and resistance, and a break above this line is critical for further gains.

Looking down, 0.8230 continues to provide support, also being a line of resistance in the past. This is only a minor line. The year-to-date low of 0.8066 is huge support line, being tested at the beginning of the week, after serving as a bottom twice in May.

A lot depends on European problems – risk aversive trading, mainly caused by European debt issues, has sent traders away from “risky” currencies such the Aussie, despite the high yield, and sent them to so called safe currencies. As the pressure on the Euro eased this week, with EUR/USD rising above 1.20, the Aussie could also make gains.

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