Bulls return to play on solid jobs data, easing of China’s restrictions
The Australian dollar regained traction on Thursday and recovered a good part of Wednesday’s 1% drop, underpinned by fresh optimism over relaxing Covid restrictions in China and solid Australia’s jobs data.
Unemployment in Australia fell to 3.9% in April, the lowest in nearly 50 years, although the mood was soured by a strong miss in employment increase (4000 in Apr vs 30,000 f/c).
Solid data signal further tightening in the labor market that would increase pressure on the Reserve Bank of Australia for further rate hikes and offer further support to the currency.
Fresh strength faces headwinds at initial 0.70 barrier, which guards pivotal 0.7047 barrier (falling 20DMA / 50% retracement of 0.7265/0.6828), with firm break here to signal reversal and open way for stronger rebound.
Price action of equities and commodities, which strongly influence the performance of the Aussie dollar, will be closely monitored by investors.
Res: 0.7000; 0.7023; 0.7047; 0.7098
Sup: 0.6949; 0.6931; 0.6872; 0.6828