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Weak Jobs Numbers Batters Aussie

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Weak Jobs Numbers Batters Aussie

The Australian dollar was under significant pressure on Thursday bucking the trend of the softer greenback. The Aussie is trading on the defensive for a dismal employment report. Any neutral policy advantage that the Aussie was enjoying was wiped out nearly instantly by the weaker than expected economic report.

Instead of gaining 15,000 jobs in January as the consensus forecast, Australia reported a net loss of 3,700 jobs, which understates the case. There was a loss of 7,100 full time jobs. Adding insult to injury, the December series was revised to show a 23,000 job loss, a little more than initially estimated. The unemployment rate jumped to 6.0% from 5.8%, which is the highest in a decade, and the participation rate was unchanged. The market was caught off sides and many had to quickly liquidate positions to avoid large losses. The recent neutral RBA statement ironically spurred some speculation about the timing of a rate hike.

The decline in the Aussie is somewhat capped by the weakness Thursday in the US market. Yields are declining which is eroding the attractiveness of the greenback.

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The AUDUSD moved lower and quickly tested support near the 10-day moving average at 0.8929. Resistance is seen near the recent highs at 0.9085. The RSI (relative strength index) moved lower with price action and is printing near 55, which is in the middle of the neutral range.

Momentum is still positive as the MACD (moving average convergence divergence) index is printing in positive territory but the trajectory of the spread (the 12-day moving average minus the 26-day moving average) has change and is now moving toward the 9-day moving average of the spread which could generate a sell signal.

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