Strong Employment Data boosts the Aussie Dollar

The Aussie dollar got a boost with a strong employment report in the morning here today. The employment change for July was +26.2K against the expected +10K. So, more than double the number of jobs were added to the Aussie economy than what was expected. The unemployment rate also came down to 5.7% against the expected 5.8%.

This once again proves the strength and the stability of the Australian economy and this naturally gave a boost to its currency against all other currencies. AUDUSD broke through 0.77 and now it is resting around that point. This break was helped not only by the strong employment report but also the general USD weakness across the board, which has been the theme for the whole of this week.

The FOMC statement didn’t indicate any specific time period for rate hikes and this came as a disappointment for some which added to the USD weakness. The Fed chose to wait for more data and this probably means that there would not be any rate hike during this year. This helped the Aussie dollar further. The general USD weakness coupled with the fact that the Aussie dollar has refused to fall, despite rate cuts from the RBA, signals that AUDUSD could well be on its way to 0.8000 in due course of time.

Attached below is the 4H chart of AUDUSD which shows that it has not broken below 0.7500 ever since the beginning of this month despite a rate cut from the RBA.

So, those who wish to go long, could take a buy with a SL below 0.75. Though there is some resistance at 0.7550, we believe that it will eventually be broken.

In other news, Japan posted a strong trade balance of 0.32T yen as against the forecasted 0.14T yen. This further boosted the already-strong yen against the USD and now USDJPY is firmly entrenched around 100. Traders are wary of jawboning and intervention from the BOJ anytime over the next few days and this could make further selling of USDJPY at this juncture, difficult. This indirectly gives support to USDJPY but for how long, is anybody’s guess.