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The June data shows total employment increased by 211k, comprising a 38k decrease in full time employment and a 249k increase in part-time employment. The total change reclaims 25% of the 835k jobs that were lost in May.
Although more are working than in May, the unemployment rate has risen due to a higher participation rate, up from 62.7% to 64%. The larger pool of Australians looking for work is a positive sign despite lifting the benchmark jobless rate.
The Australian dollar went into the event trading just above the 70 US cents, being offered slightly lower towards 0.6990 on the news. I’m watching to see if hourly support at 0.6990 can hold under the jobs data selling pressure, and whether this will be a blip in the radar followed by a quick rebound or actually drive a stronger move lower.
1-hr chart: AUDUSD trades lower from 0.70 to 0.6990 on higher unemployment rate. Support at 0.6990 is holding for now. Chart source data: Metaquotes MT5.
The AUDUSD remains a global risk proxy and moves more or less in the same direction as the S&P 500. S&P futures are finding a bid lower in the early asian session after economic data from China revealed the recovery remains fragile. The ASX200 and AUDUSD were following global equities prior to the AU jobs data.
Traders will now be looking towards the July data to be released in four weeks’ time. The June data shows the health of the Australian labour market as lockdown restrictions were being lifted - the strong lift in part-time employment reflecting the reopening of hospitality and retail sectors.
As Victoria enters a stricter six week lockdown, and a cautious outlook for rising case numbers in NSW, the labour market could take another hit next month. The Australian government may be left with no choice but to extend the JobKeeper program that is currently due to wind up on 27 September.
AUD traders could also consider the currency in terms of CAD and not just the USD, as markets navigate a diverging commodity recovery.
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