The Australian dollar weakened throughout the market after the publication of the level of average wages in the country. But the structure of this indicator and published data on the Australian labor market makes it possible to consider long positions for the AUDUSD pair in the short term.
The AUDUSD pair yesterday reached multi-month lows, approaching strong levels of support. The Australian dollar fell on a wave of selling on the back of the weak national statistics and disappointing data from China. However, despite the downward momentum, it is now possible to consider the option of long positions in the short term with "close" stop-loss.
The main reason for the next weakening of the Australian dollar is the decrease in the average wage in the country. This fact exerts pressure on the currency, but in this case, in the market, in the case of, RBA spokesperson Jan Harper about the possibility of "retaliatory measures" if inflation rates continue to be weak. And although it was about the risks of large-scale slowing of consumption, traders also projected these words to other inflation indicators.
The wage index slowed down: in the third quarter it was 0.5%, while experts expect a stronger increase to 0.7%. In the annual terms, the index rose to two percent, although the consensus forecast was 2.2%. In other words, it is too early to speak of a "large-scale slowdown", since the indicator is showing weakness, but still attempts at growth. And although the growth rate does not meet the expectations of the market, there is no reason to exaggerate the situation.
The structure of this index indicates that in the mining industry in Australia. In turn, this dynamics is explained by the latest developments in China, where steel mills began to reduce steelmaking due to environmental restrictions for the autumn-winter period. Then there was a kind of "domino effect": in the commodity market there were speculations about a decline in the consumption of metallurgical raw materials, after which prices for iron ore in China fell sharply. In November, the demand for iron ore in China could be reduced by 6 million tons, according to China Iron & Steel Association. According to the group, starting from today, in 28 cities of the country, steel production will significantly decrease. However, this is only a temporary measure (until spring),
These are not fresh news for the commodity market. Possible consequences of the tightening of environmental law in China have been discussed for a long time, at least since the beginning of the summer. Therefore, the effect of "shock therapy" did not occur, but the restrictions still affected (in particular) the Australian economy. Decrease in the index of wages. Here it is worth noting that in the sphere of finance, industry, business, public administration and the social sector. This suggests that the weakening of the indicator, although it will slow the growth of the consumer price index, but does not lead to a significant decrease. For this reason, the AUDUSD pair could not break the support level 0.
Some support for the pair was provided by the data published today on the labor market in Australia. They were somewhat questionable, but the market still decided that "the glass is half full, than empty." Traders are on the same level in the unemployment rate (up to 5.4%) - the best result since April 2013. But the increase in the number of employed is disappointed: instead of the expected gain of 17, 000, the figure was only 3, 700. The share of the economically active population has slightly decreased (by 0.1%), but the indicator of partially employed persons has increased significantly - from 9, 300 to 20, 000.
Such relatively positive data on the labor market is suspended in the AUDUSD, and at the moment the pair is trying to develop a corrective movement. In the short term, this can be exploited at 0.7680 (Tenkan-sen at D1) and the next at 0.7680 (the middle line of the Bollinger Bands indicator).
However, the overall picture from the point of view of technical analysis remains suppressed. Ichimoku indicator Kinko Hyo continues to display the bearish signal "Line Parade", and the price itself is located between the middle and bottom lines of the indicator Bollinger Bands. The situation will change only if the price breaks through the level of 0.7730 (Kijun-sen line) - then the indicator of Ichimoku will form the signal "Golden Cross" (which warns of a trend change), and the pair will be between the middle and top lines of the Bollinger Bands indicator.
Next week, several release of data are expected, which will be able to cause volatility in a pair. Firstly, it is the publication of the minutes of the last meeting of the RBA (Tuesday, November 21) and, secondly, the publication of a similar record of the Fed meeting (Wednesday, November 22). Depending on the comments of the regulator's members, the pair will determine a further direction of its movement.