Macroeconomic reports continue to provide background support to the Australian dollar, reflecting the recovery in Australia's economy. Strong data on the labor market suggests that conquering the 78th figure is only a matter of time. The Aussie has all the arguments to test the 0.7810 resistance level (upper line of the Bollinger Bands indicator on the daily chart). All that is needed is an additional informational impulse, which will either finally weaken the US dollar or strengthen the Aussie.
The Reserve Bank of Australia has repeatedly expressed concern about the pace of recovery in the labor market. RBA Governor Philippe Lowe said that, in expanding the program to stimulate the economy, further steps of the regulator will depend largely on the dynamics of key indicators, where unemployment plays a central role. That is why traders showed increased attention to this release. Following the publication, the AUD/USD pair jumped to the borders of the 78th figure, but was forced to retreat against the background of strong greenback positions. Nevertheless, this release is of strategic importance, as, in fact, it allows the RBA to continue to maintain a wait-and-see attitude.
Almost all of the components of Australia's Nonfarm reports came out in the green zone. The unemployment rate fell to 6.4%, contrary to the forecast's estimate of 6.5%. This indicator demonstrates a downward trend for the third month in a row, indicating "healthy trends" in the labor market. The last time unemployment was at this level was in April 2020, when Australia felt the first negative effects of the coronavirus crisis. For many months, up to this point, this indicator has fluctuated in the range of 5.0% -5.3%. During its February meeting, RBA announced their forecast expecting the unemployment rate this year at 6%, while this figure will return to the pre-crisis range of 5% -5.5% next year. But the unemployment rate is falling at a faster pace than the initial forecasts, so the indicator may well return to 5% in the second half of this year.
A separate line should note the increase in the number of employed in January. The overall figure fell slightly short of the predicted value (but quite minimal - 29,100 instead of the projected increase by 30,000). However, the structure of this indicator suggests that the overall growth was driven primarily by full-time employment. Whereas part-time employment showed a negative result (ratio of +59/-29.8). RBA reports have repeatedly indicated that full-time positions tend to offer higher wages and higher levels of social security than part-time jobs. Therefore, the current dynamics should not cause concern among traders of AUD/USD. Moreover, a similar picture was observed in the previous month when the component of full-time employment was twice as high as the component of part-time employment (35/14).
This added to the optimistic macroeconomic picture. Of course, the published figures are still far from the ideal pre-crisis levels. But at the same time, it should be admitted that the growth rates of key indicators are ahead of forecasts. This fact suggests that the Australian economy, as a whole, withstands "coronavirus blows".
This fundamental background is conducive to the development of the upward trend. The upward dynamics of the AUD/USD is constrained by the (so far) strong position of the US dollar, which was in high demand on Thursday on the back of a decline in the stock market and general risk aversion. Thursday's decline in the US stock market was led by tech giants such as Facebook and Zoom Video, whose shares lost more than one percent. One of the factors that caused Facebook's shares to plunge was its conflict with the Australian lawmakers, obliging the company to pay local media for the distribution of unique content. In response to this, Facebook turned off news feeds for Australians.
However, dollar bulls began to loosen their grip again during the Asian session on Friday. The US dollar index turned 180 degrees and headed downward, reflecting the corresponding investor sentiment.
Thus, in the medium and long-term, purchases of the Aussie are still relevant, even despite the temporary bursts of market interest in the US dollar. Longs can be considered with the main target of 0.7810 (the upper line of the Bollinger Bands on the daily chart). On D1, the price is between the middle and upper lines of this indicator, as well as above all the lines of the Ichimoku trend indicator. This indicates the priority of the upward scenario. The support level is the target at 0.7660 - this is the upper border of the Kumo cloud on the same time frame. You may consider placing a stop loss here because, if for some reason, the pair falls below this level, the upward trend will lose its relevance for a short time. However, given the general fundamental background for the AUD/USD pair, this scenario looks unlikely.
