Addition of 26k Jobs in July Turns Aussie Stronger

Addition of 26k Jobs in July Turns Aussie Stronger
August 22, 2016

The Australian dollar weakened against most of the currencies including the Singapore dollar, following the RBA Governor Glenn Stevens’ admission that the Central bank is facing a Herculean task of trying to achieve the inflation target while maintaining the economic growth. The AUDSGD pair declined from 1.0401 to a low of 1.0221 on last Wednesday. While the concerns cannot be brushed aside, as of now the Australian economy is in a far better shape than several other major economies. The evidence stems from the recent economic data reported by the Australian Bureau of Statistics (ABS). On the contrary, the rising unemployment rate and economic decline paint a gloomy picture of the Singapore economy. Thus, for the reasons explained below, we have a short-term bullish outlook on the AUDSGD pair.

Last week, the ABS reported a 0.5% rise in the June’s Wage Price Index. The reported reading met the analysts’ estimates. The ABS also reported an addition of 26,200 jobs in July. This brought down the Australian unemployment rate to 5.7%. The analysts were anticipating an addition of only 10, 200 jobs and an unemployment rate of 5.8% at the end of July.

In the case of Singapore, the unemployment rate increased to 2.1% in the second-quarter of 2016, from 1.9% in the previous quarter. The recorded unemployment rate is the highest since March 2014. The GDP of Singapore grew 2.1% in the second-quarter of 2016. The rate of expansion remained flat relative to the first-quarter of 2016. The Ministry of Trade and Industry of Singapore slashed its 2016 economic growth forecast to a range of 1% to 2%, from the prior estimate of between 1% and 3% growth. Thus, we are certain that the fundamentals will keep the Australian dollar relatively stronger than the Singapore dollar.

The currency pair has bounced off the support at 1.0240 and is currently trading at about 1.0260. The next major resistance for the AUDSGD pair is at 1.0440. The stochastic indicator is on the brink of rising above the 20 level.

AUDSGD - Technical Analysis - 22nd August 2016

Thus, a long trade can be taken in the AUDSGD pair at 1.0260 levels. The long position can be closed near the 1.0440 level. As a precautionary measure, a stop loss order can be placed below 1.0210.

Alternatively, the uptrend can also be capitalized by purchasing a one touch call option from a suitable binary broker. The trade should be taken only if the expiry date falls in the third week of September. Furthermore, the strike price of the call option should be lower than 1.0440.



Sammy is our forex expert, with over 20 years experience in the financial sector, she will be keeping you up to date with the ups and downs of currencies around the world

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