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AUD/USD. Australian Nonfarm did not help the aussie: the downward scenario still in force

The Australian dollar paired with the US currency settled at the base of the 74th figure, temporarily suspending the decline. This is partly due to the "Friday factor", partly due to the fact that many trading platforms were closed - the Catholic world celebrates Good Friday. In general, the downward trend remains in force: contradictory data on the Australian labor market, which were published on Thursday, did not help the aussie. Almost all components of the release came out in the red zone, to the disappointment of AUD/USD bulls. On the one hand, there is nothing catastrophic – the labor market has sunk a bit, but the result "in dynamics" is important here in order to understand the trends. On the other hand, now, in fact, an interest rate increase is at stake: the Reserve Bank of Australia (RBA) has allowed the option of tightening monetary policy within the current year, "if the main macroeconomic indicators show an appropriate result." Therefore, the data fulfilled the role of a kind of alarm bell. The issue of raising the rate has again moved into the discussion plane, especially since traders do not yet have inflation data for the first quarter of 2022. If inflation also pumps up, then the RBA is unlikely to decide on concrete steps this year.


Returning to the "Australian Nonfarm", it should be noted first of all that the unemployment rate in March remained at 4 percent. The labor market gave the same result in February. At the same time, most experts predicted a further decline in the indicator – to the level of 3.9%. The March report suggests that, on the one hand, unemployment remained at the level of multi-year lows (the last time the indicator was in this area in August-September 2008), but, on the other hand, the indicator did not justify the optimistic hopes of most analysts.

Another component also disappointed. The number of people employed in March increased by only 17,000, although experts predicted a 30,000 increase. At the same time, in February, this indicator grew by 77,000 at once. The March result is the weakest since October last year, when the indicator went into negative territory altogether. The only reason for optimism here is that the increase in the number of employed in March was only due to the full employment component (+20,000). While the part-time component showed a negative result (-3,000). This trend in general can have a positive impact on the dynamics of salary growth, since full-time positions, as a rule, offer a higher level of wages and a higher level of social security. Although this fact is a "weak consolation" for AUD/USD bulls, since the dynamics of the growth in the number of employed leaves much to be desired.

Let me remind you that following the results of the April meeting, the RBA tied the issue of tightening monetary policy to inflation. But at the same time, the central bank showed clearly hawkish hints, excluding from the text of the accompanying statement the phrase that the central bank is "ready to be patient" in the context of an interest rate hike. Obviously, this hawkish attitude should be fueled by the corresponding results – primarily in the labor market and inflation. Therefore, the latest Australian Nonfarm naturally put pressure on the Australian currency. Moreover, the US dollar continues to gain momentum against the backdrop of the Federal Reserve's intentions to raise the interest rate at the May meeting by 50 points at once. In addition, the external fundamental background also plays on the side of the greenback, due to the ongoing (and so far inconclusive) Russian-Ukrainian negotiations and tensions around Taiwan. All these fundamental factors suggest that the downward scenario for the AUD/USD pair is a priority.

From a technical point of view, the situation is currently uncertain. On the daily chart, the AUD/USD pair is located between the middle and lower lines of the Bollinger Bands indicator and above the Kumo cloud. However, the Tenkan-sen and Kijun-sen lines are also above the cloud – moreover, the price is located directly on the Kijun-sen line. This combination does not signal the advantage of a descending or ascending scenario. Now we can only say that the bears are in close proximity to the support level of 0.7380 (the lower line of the Bollinger Bands on the same timeframe). In view of this fact, short positions still look risky in the short term, especially considering the "Friday factor". If AUD/USD bears overcome this price barrier next week, then in this case short positions will be in clear priority, with the main goal of 0.7300 (the upper limit of the Kumo cloud on D1). There is no need to talk about the upward prospects yet: the greenback still dominates the main dollar pairs, and the AUD/USD pair is no exception here.

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