AUD - AUD/USD prediction ahead of Australian jobs data
The AUD/USD price declined to the lowest level since November last year after New Zealand reported its first Covid case in six months. The pair fell to 0.7240, which was about 8% below the highest point this year.
Australian and New Zealand Covid
The Australian dollar retreated after the number of Covid-19 cases continued rising in the country. The country confirmed more than 600 new Covid cases even as it continued to implement lockdowns in some states.
The situation worsened after New Zealand reported one case, triggering the government to announce a lockdown. This lockdown will see the government ramp up its vaccination drive and do contact tracing.
Therefore, the AUD/USD pair declined as the risk-off sentiment returned to the market. It also declined because of the close relationship between Australia and New Zealand.
Meanwhile, data published by the Australian Bureau of Statistics (ABS) showed that wages stagnated in the second quarter even as companies faced labour shortages.
The wage price index rose by 0.4% in the second quarter after rising by 0.6% in the previous quarter. This increase was lower than the median estimate of 0.6%. The wages rose by 1.7% on a year-on-year basis.
These numbers came a day ahead of the latest Australian jobs numbers that will come out on Thursday. The number is expected to show that the country’s unemployment rate rose from 4.9% to 5.0% in July.
Analysts also expect that the participation rate declined from 66.2% to 66.0%. Also, the country is expected to have lost more than 46k jobs in July. The relatively weak labour market is mostly because of the ongoing lockdowns in states like New South Wales (NSW) and Victoria. The AUD/USD will also react to the FOMC minutes.
AUD/USD technical analysis
The hourly chart shows that the AUD/USD pair declined to a low of 0.7238 on Tuesday. The pair has pared back some of those losses and is trading at 0.7267. It also moved below the 25-day exponential moving average.
The pair is substantially below the important resistance level at 0.7315 while the MACD has made a bullish crossover. The Relative Strength Index (RSI) has also moved from the oversold level of 16 to 44.
Therefore, the pair will likely resume the downward trend as bears attempt to move below this week’s low at 0.7240.
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