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AUDUSD - Drops to Eleven Year Low Below 0.66 on Jobs Data



AUDUSD - Drops to Eleven Year Low Below 0.66 on Jobs Data
After applying pressure to the resistance at the key 0.6750 level, the AUDUSD has since moved sharply lower falling below 0.66 briefly to its lowest levels for more than eleven years. Due to this multi-year low, there are no obvious support levels available, although the AUDUSD may very well be propped up at different levels. The AUDUSD has now spent the last month below the key 0.6750 level and is likely to meet resistance at this level again if and when it is able to rally higher.

In the last two months the AUDUSD has generally fallen sharply from a six month high above 0.70 down to the current lows although it did enjoy some solid support from another key level of 0.6850 before dropping down to 0.6750.

The 0.6750 level has supported the AUDUSD well in recent months so this level is likely to continue to offer some resistance to any rally higher. Likewise the 0.6850 also looms likely to offer resistance should the AUDUSD be able to get back above the 0.6750 level any time soon. In the last two weeks of last year, it surged higher off support at 0.6850 to the six month high after having moved through previous resistance at 0.6850, which had put selling pressure on prices.

The trading range between 0.6750 and 0.6850 has been quite popular in the last six months, so it wouldn’t surprise many if it was to return there again. In the last three months of 2019, the AUDUSD steadily and slowly moved higher achieving higher peaks and troughs to rally off its ten year low around 0.6670 reached in early October. It has now however returned all those gains in half the time and has moved lower to around 0.66.

Last week the Australian Bureau of Statistics reported the unemployment rate has moved from 5.1 to 5.3%.  Interestingly the Reserve Bank of Australia (RBA) cited an increase in the unemployment rate as the most likely trigger for another interest rate cut, following three rate cuts last year to a historic low of 0.75%.  The markets are keeping an eye on the central bank with many expecting another cut before mid-year and if the jobless rate was to increase again, another cut would almost be a foregone conclusion.  Meanwhile, RBA Governor Philip Lowe has warned that Australia is paying an economic price for climate change.  In a recent forum, Dr Lowe also said that drought and the bushfires have impacted consumer sentiment.  The central bank governor did concede that the RBA should "stick to their knitting" with the general economy, however they cannot avoid the financial impact of climate change."  Addressing climate change isn't something that is any responsibility of the Reserve Bank of Australia, but what we do have a responsibility to do is to understand the economic and the financial implication of climate change," he said.  "The world is getting hotter and the climate is more variable. We're seeing already in Australia, perhaps more than anywhere else in the world, the effects of that."

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This post was written by Graeme Watkins

CEO Valutrades Limited, Graeme Watkins is an FX and CFD market veteran with more than 10 years experience. Key roles include management, senior systems and controls, sales, project management and operations. Graeme has help significant roles for both brokerages and technology platforms.