USD steadies after data but AUD now down to US 75 cents
Friday 17th of November
Thursday’s Australian labour market report was a classic example both of why foreign exchange can sometimes be such a difficult asset class, and why it pays to look beyond the immediate headlines which flash across the screens and the news wires. The world is a dangerous place already without adding unnecessary layers of excitement by programming trading systems to react in a pre-determined way to economic data releases. From a starting point of 0.7593 yesterday, the AUD/USD pair traded at both 0.7584 and 0.7606 within moments as the employment numbers were simultaneously better and worse than expectations: weaker job creation but a lower unemployment rate. A more considered look at the data showed not only the weakness in jobs was false: full-time job creation far outstripped the losses in part-time employment but so too was the strength of the unemployment rate; it fell largely because the participation rate fell a tenth to 65.1%. The more considered reaction to the data would have been to do nothing and that’s pretty much what then happened over the next 18 hours! AUD/USD has been stuck in a 22 pip range from 0.7582 to 0.7604 and finishes the NY session exactly unchanged from where it was one minute before the jobs report. Overall, that seems a fair reaction.