AUDUSD: Aussie Suffers Following Dismal Employment Report

The Aussie began the week impressively, following the news that Australian Retail Sales for June rose by double the market expectations. The Australian Bureau of Statistics said that sales increased by 0.6%, above the 0.3% expected. This raised some hope that the Australian economy could still move away from mining/export reliance and transition towards domestic consumption.

However, the AUDUSD declined by nearly 100 pips towards the latter end of the week, following an extremely disappointing employment report. Unexpectedly, the Australian unemployment rate rose to 6.4% (the highest for a decade). This news enticed the pair to close below 0.93 for the first time since the 4th June.

Next week sees a lower quantity of Australian economic data announced, with the only noticeable releases being Business Confidence on (Tuesday morning) and Westpac Consumer Confidence (Wednesday morning). During a recent Reserve Bank of Australia (RBA) Monetary Statement, the Australian Central Bank signaled that consumer confidence levels are noticeably declining. The RBA have previously warned on many occasions that the Australian Dollar was overvalued and now that we have had a break below 0.93, the time for an AUD decline could be approaching.

In regards to the technicals on the Daily timeframe, a bearish trendline has now emerged and as long as downside movement is the next path this pair is heading, the trendline looks a contender to control the future direction of this pair. If so, upside moves will likely be capped to the trendline, with found at 0.9289, 0.9311 and 0.9333. Support is located at 0.9239 and 0.9202. If the AUDUSD is heading for a decline, a downside break below the latter support level would signal the weakest AUDUSD valuation since the 2nd May.

About the Author
Jameel Ahmad is the Chief Market Analyst at Forex Time (FXTM). He holds a BA (Hons)degree in Business Studies with Accountancy & Finance from the University of the West of England, Bristol, UK. In his early career, Jameel worked on a variety of projects in the Middle East, Europe and United States, which allowed him to develop a detailed understanding of banking, international finance and asset management. Later on he worked as a strategic research analyst for an international brokerage firm, where he gained invaluable experience in writing FX commentaries and fundamental analysis on distinguished financial websites.

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