Australian Dollar Enjoys On Bullish Momentum After The Release Of Positive Employment Data
The Aussie dollar experienced a significant rally following the release of the July employment report, which revealed that employment figures in Australia were better than anticipated.
The employment report revealed that there were 41,000 new jobs in Australia that were created in July. The impressive figure was more than the figure that analysts expected by 14,000 and was closer to the 42,300 new jobs that were created in May. The report also disclosed that 34,500 new jobs created in July were full-time while only 6,700 of them were part-time jobs.
Experts anticipate rate cuts over the next few weeks
The Aussie unemployment rate for July was 5.2% and in turn, eased the pressure on interest rate changes. Experts believe that there is a 22% chance that the Reserve Bank of Australia will carry out a rate cut in September. This probability was slashed from 44% on Wednesday after the job market figures were released.
The positive job market report particularly had a positive impact on the Australian Dollar's performance. This reflected on the AUD/USD currency pair's performance, which experienced a noteworthy surge during Wednesday's trading session.
The AUD/USD currency pair was bearish before the Aussie job came out, causing a bullish reversal on Wednesday. The currency pair’s lowest trading point during the session was 0.6735 while the bullish momentum spilled over to Thursday with the price peaking at 0.6790. The AUD/USD currency pair traded at 0.6780 at the time of this press.
The July job report was not the only economic report fueling the Aussie dollar's rally. Australia's August consumer inflation expectations have increased from July's 3.2% to 3.5% in August, which is the highest expectation figure over the past four months.
The Australian Dollar is still at risk because of the ongoing global trade uncertainty
Although the Australian Dollar has demonstrated a strong performance courtesy of the jobs report, analysts are still skeptic about the global market uncertainties.
Particularly with regards to the ongoing trade war between China and the U.S. China is one of Australia's major trading partners and so when the Chinese Yen is affected by the trade stand-off, the impact trickles down to trade partners such as Australia, thus affecting the Aussie dollar.
The global trade slowdown has also forced central banks from different countries, including Australia, to consider policy adjustments that will help their economies to weather the negative effects. Such measures include interest rate adjustments, which also affect the currency's performance.
Investors have currently adopted a cautious approach to avoid the currently prevailing risky market conditions as global trade slows down. This has encouraged investors to invest in haven currencies such as the Japanese Yen. The latter has lately been performing strongly courtesy of the attention that it has been getting from investors.
Aside from the volatile global trade conditions, Australia’s positive job market report is a good indicator that things are moving in the right direction. More employment means people have salaries and thus purchasing power. They can thus contribute to the flow of money and resources, thus helping to improve the economy.