Breaking: Aussie jobs data better than expected, but the caveat is …

The Australian March employment data has been released as follows:

• Australia March Employment +5.9k s/adj (Reuters poll: -40.0k).
• Australia March Unemployment rate +5.2 pct, s/adj (Reuters poll: +5.5).
• Australia March Full-time Employment -0.4k s/adj.
• Australia March Participation Rate +66.0 pct, s/adj (Reuters poll: +65.9 pct).

The caveat is … 

This data was better than expected, but remember, the survey was conducted in the first two weeks of the month (prior to the introduction of lockdowns and other restrictions). We will not get the brunt of COVID-19’s until April’s data. 

AUD/USD implications

The Aussie dollar hit 1-month highs earlier in the week despite consumer sentiment suffering its largest monthly fall on record in April. It has been closely linked to US equity sentiment, but that now is taking a turn for the worst. With commodities under pressure, the US dollar back in vouge and weakness in key Asian FX barometers such as USDCNH and AUD/JPY, AUD/USD could be destined to deteriorate further from its early March drop and 78.6% Fibonacci highs, eyeing a 23.6% Fibo retracement of the latest bullish stretch to the 0.6220s and support structure. 

• Dollar Index trades on a solid foot near 99.80

However, dips in AUD could well be offering committed bulls a discount. A supporting factor for AUD is, however, is that the Australians have very successfully managed to contain their COVID-19 spread. This could mean that tapering is on the cards and should the government relax the lockdowns, business activity, in lockstep with its biggest trading partner, China, then this unemployment data will start to improve, in favour of the Aussie. As other nations’ COVID-19 crisis peak, one would expect an unwind of US safe haven holdings and a spike in commodities, further supporting the case for higher AUD.

About the Unemployment Rate

The Unemployment Rate released by the Australian Bureau of Statistics is the number of unemployed workers divided by the total civilian labour force. If the rate hikes indicate a lack of expansion within the Australian labour market. As a result, a rise leads to weaken the Australian economy. A decrease of the figure is seen as positive (or bullish) for the AUD, while an increase is seen as negative (or bearish).