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#1 17-08-2020 13:54:28

johnedward
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From: Paris - France
Registered: 21-12-2009
Posts: 2910
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AUD: better-than-expected job figures support the AUD's rally

AUD: better-than-expected job figures support the AUD's rally


Last week's job figures from Australia confirmed, once again, that the nation is handling the virus situation recession better than many other developed economies. Last month, the Australian economy created nearly 3 times more jobs than expected, surprising even the most optimistic scenario.

However, the AUD did not react as expected. It rallied against the USD, but not against the EUR, for example. On the contrary, the EUR/AUD traded in a bullish tone throughout last week, reaching as high as the 1.6529 zone on Thursday just before US east coast traders prepared to close the market.

How is it that the economic data is not what it used to be? Since when does tripling the expected number of jobs not mean much for a currency?

The right answer? It has always been the same.

http://www.forex-central.net/forum/userimages/AUS-employment.jpg


Summer trading and other markets matter more than economic data

One answer is that summer trading conditions govern the markets. Simply put, we are all at the mercy of the trading algorithm.

This is nothing new. Every year, similar things happen around certain calendar dates. Summer is one of them. Thanksgiving and Christmas too. 

During these periods, the financial market community focuses less on the market and more on holidays. Thus, trading algorithms and correlations dominate price action. Things that don't make sense in other circumstances are observed everywhere.

The AUD remains a base currency. As commodities such as gold and silver have exploded in recent months, the Aussie dollar naturally trades with a bid price. That is, a bid against the same currency against which the gold and silver markets have recovered, namely the USD.

Such a correlation is likely to continue as long as commodity prices continue to rise. What is unusual is that the Australian dollar is trading with a supply tone against the EUR, for example, and an extreme supply tone against the USD. As a result, the EUR/AUD pair is extremely bullish on all levels.

The EUR/GBP is another example of a pair that also lives in its own world.

To sum up, the employment data in Australia is simply excellent. Compared to other parts of the world, it looks like a V-shaped recovery - one that was badly needed during their first recession in decades.

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"Anything worth having is worth going for - all the way." - J.R. Ewing

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