The Aussie lost ground to the greenback yesterday following the release of weaker-than-anticipated employment data for September. The Australian dollar’s decline was also fueled by better-than-anticipated US existing home sales data for the same period. Overall, the AUD/USD pair declined from a high of 0.6340 to a low of 0.6295 in the past 24 hours.
According to the Australian Bureau of Statistics, the country’s economy added a mere 6,700 jobs in September, following an addition of 63,300 jobs in the previous month, but missed forecasts of 20,600 job additions.
Correspondingly, the number of employed people increased to 14,111,200 from 14,104,500. The number of unemployed people fell by 19,800 to 520,500. This led to a decline in the unemployment rate to 3.60% from 3.70%. Economists did not anticipate any change in the unemployment rate.
Likewise, the underemployment rate fell to 6.40% from 6.50%.
The participation rate inched lower to 66.70% in September from 67%. Overall, the employment-to-population ratio decreased to 64.40%.
According to the data published by the US Department of Labor, the country’s first-time unemployment claims fell to 198,000 in the week ended October 14 from 211,000 (upwardly revised from 209,000) in the previous week, better than forecasts of 21,000 claims.
The four-week moving average was 205,750, down from 206,750 (upwardly revised from 206,250) in the earlier week.
The Philly Fed manufacturing index improved to -9 in October from -13.50 in September but missed forecasts of -6.70. The reported reading reflects the 15th negative reading in the past 17 months.
The index for new orders increased by 15 points to 4.40 in October. Likewise, the index for current shipments rose to 10.80 from -3.20. Furthermore, the employment index rebounded into positive territory with a reading of 4 from -5.70. This is the first positive reading since February. The index for future general activity inched down to 9.20 from 11.10.
According to the US National Association of Realtors, the country’s existing home sales fell to 3.96 million units in September from 4.04 million units in the previous month but surpassed forecasts of 3.89 million units.
On a y-o-y basis, existing home sales fell by 15.40% (a decrease from 4.68 million units in September 2022) in September 2023.
Total housing inventory was 1.13 million units in September, reflecting an increase of 2.70% on a m-o-m basis. However, the figure is 8.10% lower than the 1.23 million units reported in September 2022. Overall, the unsold inventory stood at a 3–4 month supply at the prevailing sales pace, an increase from 3.30 months in August.
The solid US economic data is expected to keep the AUD/USD pair slightly bearish in the upcoming trading sessions.
Technically, the AUD/USD pair is ascending after testing the support at 0.6290. The next resistance is anticipated to be only near 0.6444. Additionally, the stochastic indicator is rising towards the bullish region. Therefore, we anticipate the AUD/USD pair to remain in an uptrend in the near term. As the economic data and technical setup contradict each other, the currency pair is likely to trade in a narrow range. It is prudent to take a long position only after the currency pair breaks above its 50-day moving average.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
