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AUDUSD - Surges to Two Year High Above 0.76 as Australia’s Unemployment Drops



AUDUSD - Surges to Two Year High Above 0.76 as Australias Unemployment Drops
In the last few days the AUDUSD has resumed its surge higher to reach its highest level in two and a half years above 0.76, after pausing for two days. The last few weeks has seen the AUDUSD move strongly higher after enjoying solid support from the 0.7250 level. It initially surged strongly through the 0.7250 level before resting on the level. Prior to the surge it had fallen sharply back down through support at the key 0.7050 level down to a three month low below 0.70, before rallying strongly. Although some distance away now, should the AUDUSD decline from its current highs, the 0.7250 level would be expected to step up and provide some support again.

Having resisted prices so strongly, it was no surprise that the 0.7250 level stepped in and offered support once it was broken through so strongly in early November. Up until its break several weeks ago, the AUDUSD spent most of its time trading between two key levels, meeting resistance at 0.7250 and being supported at 0.7050, after having fallen sharply through the 0.7250 level down to a then two month low below the key 0.7050 level in late September. It did well to rally quickly to back above the 0.7050 level which had supported the AUDUSD, although the 0.70 level has helped out a little too.

Before dropping into its recent range between 0.7050 and 0.7250, the AUDUSD spent around two weeks resting on support at 0.7250 after easing away from a two year high above 0.74, which is why the 0.7250 has offered resistance and support since. In the week leading up to the two year high the AUDUSD was able to push through the resistance at 0.7250, which had been placing downward pressure on the currency pair. The 0.7050 level has also played a key role in the last few months first providing resistance to the AUDUSD and more recently supporting price.

For the month or so before the break through the 0.7050 level in July, the AUDUSD had seemed content to remain within a range between another key level of 0.6850 and the resistance at 0.7050. Leading in to that range, the AUDUSD had spent several weeks pushing higher to reach 0.7050 however it ran into a wall of resistance, as it had previously offered stiff resistance to the AUDUSD last year, reinforcing how significant that level is. The 0.6750 and 0.6850 levels are also a chance to support the AUDUSD should they be called upon.

After shooting up sharply during the initial stages of the coronavirus pandemic, Australia’s unemployment rate has fallen to 6.8% during November, with 90,000 workers finding new jobs.  The latest jobs data from the Australian Bureau of Statistics (ABS) shows that 74,000 of those new jobs were in Victoria, with the southern state recently exiting the harshest lockdown of any state.  ABS head of labour statistics Bjorn Jarvis said there were still 138,000 fewer people employed since March and 226,000 Australians unemployed in that time.  “Early in the COVID period we saw large flows of people out of the labour force - 666,000 people between March and May - and the participation rate fell 3.3 percentage points over the two months,” Mr Jarvis said.  Mr Jarvis noted Victoria’s labour market was catching up with the rest of the country following the easing of shutdown measures in the southern state.  “The gap between Victoria and the rest of Australia has narrowed considerably since September off the back of two consecutive months of strong recovery in employment and hours,” he said.

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The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.

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.