This continued weakness in the Australian dollar (AUD) against the US dollar (USD) has kept AUD/USD below the key 0.6500 level. The participation rate in Australia for May was 67%. This very specific use of the word “delinquency” was 0.4% lower than the expected delinquency rate of 67.1%, thus adding to the drop. Nonetheless, even with the release of such major economic data, the AUD/USD pair barely reacted to it.
In the Asian trading session on Thursday, AUD/USD continued that move lower, trading just under the all-important 0.6500 psychological level. The currency pair’s performance was emblematic of the continued plight of the Australian dollar against a hostile external environment pounding the sentiment of markets. As a result, the USD surged as much as 800 points since the recent bullish % handicap high print. Though, it wasn’t able to take full advantage of this momentum and only hit a new weekly high.
The unfortunate reality is that the future volatility in AUD/USD will be directly correlated to the volatility of the USD itself. As the greenback struggled to maintain footing after its recent gains, the Australian dollar was exposed. Market observers note that the muted reaction of AUD/USD to surprise employment numbers is an unmistakable sign of crisis confidence in the currency. Others, however, are doubtful of its capacity to recover.
Traders are understandably jittery following recent events. So their monitoring very, very closely—which I think is the right approach—how these new jobs figures will inform future decisions on monetary policy. Flattish reaction from AUD/USD indicates that investors are wary. Most are prioritizing fiscal stability as they grapple with continued unknowns.
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