The Australian Dollar (AUD) received a boost from important economic data on Thursday morning when the Australian Unemployment Rate for May was reported to have dropped to 4.4% compared to 4.5% in April.
According to official data from the Australian Bureau of Statistics (ABS), this figure came out exactly as market experts had predicted.
Not only that, Australia's Employment Change data also recorded a very positive surprise:
Job Gains: The Australian economy managed to add 40.3K jobs in May, much higher than market expectations of only targeting an increase of 25K. (Note: April recorded a severe drop of -40.7K).
Full-Time Employment: Increased by 5.2K.
Part-Time Employment: Soared by a high of 35.2K.
Labour Force Participation Rate: Slightly increased to 66.7% from 66.6% previously.
ABS Head of Labour Statistics, Sean Crick, explained that the backlog of job seekers who were previously ‘stuck’ waiting to start work finally started to be absorbed into the market in May. This was the main reason why hiring figures jumped by 40,000 and the number of unemployed people fell by 18,000.
Good News For The Economy, But Why Did AUD/USD Fall?
In theory, such solid and strong labour market data should have given the Aussie currency a tonic to launch a rocket upwards. A strong labour market signals that the Reserve Bank of Australia (RBA) has a good reason to remain hawkish (maintain or raise interest rates) in order to curb inflation.
However, the reality in the Forex market this morning is different. This solid data failed to drive a surge in the Australian Dollar. At the time of writing, the AUD/USD pair is trading down 0.09% at around 0.6893.
Why is this happening?
US Dollar Factor: The strength of the US Dollar (USD) that is currently dominating the market limits the room for the AUD to make a significant increase.
Priced In: The market has most likely priced in the 4.4% unemployment figure, resulting in no major surprises that could trigger panic buying.
Conclusion for Traders: Although AUD/USD looks a little gloomy this morning due to external factors, the fundamentals of the Aussie currency are actually still solid, supported by their healthy labor market. As long as the price can hold above the nearest support level, the opportunity for the AUD to rebound when the US Dollar weakens remains.
Do you have a Buy or Sell trap set on the AUD/USD pair today? Take good care of your Money Management (MM)!
