The Australian dollar broke ranks and climbed the charts today much to the surprise of many, as the economy was downbeat despite the confusing figures that came out today regarding employment. Employment change was only 300 compared to the estimate of 13.5k yet the unemployment rate dropped to 5.8% from a previous 6.0%, this may seem confusing but in reality what has actually occurred is that the participation rate has decreased as well as less people are looking for work, which is a worrying sign in the economy and something the RBA will be looking to watch. The final reading for last months participation rate came in at 64.9% and the market was expecting 65.2%, so a large change in the course of a month and one that will have policy makers thinking carefully over the next monetary policy move.
Despite all the interesting economic data it was USD weakness which propelled the AUDUSD up the charts, and this has certainly helped resume the bull market that was a large feature previously. Resistance at 0.7656 has certainly played a part in slowing down the aggressive moves up the chart, and on the weekly chart it's quite clear that we may see further bullish movements from the strong candlestick patterns we are seeing running up the chart. The next major level will be at 0.7758 and the market will likely look to target this key area.
The US economy saw some marked improvement today as US employment data was fairly positive with unemployment claims coming in 265K (268K exp) and the JOTL job openings coming in at a fairly strong 5.54M (5.50M exp), this was however down on last month's reading of 5.61M, which the markets will be very much aware off. Despite all of this positive data that was above market expectations the USD continued to come under pressure as market bets on a FED interest rate hike caused large selling. This however was not the case with the S&P 500 where dovish results generally mean the opposite and it went onto to rally through the course of the day.
On the charts the S&P 500 rise is no surprise, given that low interest rates certainly make the S&P a much more attractive proposition in the long run. The S&P 500 had been forming a tight wedge pattern on the chart, but after today's movements it has broken out on the upside and the bulls are looking to take control and reassert dominance and the bullish trend from before. The next level of resistance here is now looking like 2072 and this will be a key level to climb towards, I'm not sure that we will see it push past here unless we see further dovish signals from the FED, which is a possibility. But, we certainly won't have the perfect storm scenario previously where markets rallied higher on cheap liquidity.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.