- AUD/USD bounces off yearly low on strong jobs report for July.
- Australia Employment Change rose past -46.2K forecast, Unemployment Rate dropped to 4.6%.
- DXY jump amid sour sentiment keeps bears hopeful.
- Virus updates, central bank signals become the key, second-tier US data may offer intermediate moves.
AUD/USD picks up bids to 0.7230, off November 2020 low, after Australia jobs report for July surprised markets with positive data during early Thursday. It should be noted, however, that the challenges to the global sentiment keep the pair sellers hopeful.
Australia Employment Change jumped past 29100K prior and -46.2K forecast to +2.2K whereas Unemployment Rate dropped below 4.9% previous readouts and 5.0% market consensus to 4.6%.
Read: Aussie Unemployment Rate drops to 4.6% vs 5.0% expected, AUD better-bid
Despite the upbeat data, the virus-led local lockdowns in Australia and the US Dollar Index (DXY) rally favors the AUD/USD pair bears.
Bloomberg aptly portrays the virus woes while saying, "Australia has suffered its worst day since the start of the Covid-19 pandemic, with total daily cases surpassing the previous record posted more than a year ago as a delta variant outbreak spreads as far as New Zealand." On the other hand, Reuters said, “The United States leads the world in reported COVID-19 cases and deaths. Daily U.S. cases soared from fewer than 10,000 in early July to more than 150,000 in August as the Delta variant took hold.”
It should be noted that the DXY’s double-top breakout also exerts additional downside pressure on the AUD/USD prices. In doing so, the US Dollar Index ignores downbeat US 10-year Treasury yields and mildly bid S&P 500 Futures.
Other than the coronavirus-led market pessimism, the July Federal Open Market Committee (FOMC) Minutes also weighed on the risk appetite and underpinned the US dollar’s safe-haven demand. The FOMC minutes shed the rate hike concerns, despite supporting the tapering, while also conveying the dissatisfaction of employment recovery among the policymakers.
Having witnessed the initial market reaction to the Aussie employment data, AUD/USD traders will jump back to the qualitative catalysts for fresh impulse. Among them, the covid headlines and central bank signals will be important. Also, the weekly prints of the US Jobless Claims and monthly Philadelphia Fed Manufacturing Index for July may offer short-term direction
Technical analysis
Unless bouncing back beyond July lows near 0.7288, AUD/USD remains vulnerable to drop towards late October 2020 high surrounding 0.7180.