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Rubbery Data Knocked The AUD Off Its Perch Above 77 Cents

Published 21/10/2016, 11:47 am
Updated 06/07/2021, 05:05 pm

Originally published by AxiTrader

Quick Recap

The release of the much weaker than anticipated September jobs data in Australia yesterday, and the apparent loss of 53,000 full-time jobs, was all the excuse traders needed to thump the AUD/USD back from its perch in the resistance and supply zone above 77 cents.

That peak to trough move of 117 points saw the Aussie as the weakest performer of the major currency pairs in the past 24 hours by a long margin. Technically it is a bearish outside day which will make it difficult for any gains to hold before a period of consolidation.

What You Need To Know

The Aussie was trading around 0.7730 at 11.30am yesterday so as soon as the jobs data, and the big miss with a print of -9800, hit the screens it was clear the Aussie dollar was going to be knocked lower.

Chart

That was then reinforced by the big fall of 53,000 full time jobs.

Now the monthly seasonally adjusted data is rubbery. It's been widely criticised in Australia's economics community, it doesn't fit with private sector survey data and indications of employment, and the changed focus from the ABS to "trend" data in the past year or so suggests even Australia's official statistician understands this.

But, just as traders react to Chinese data, US data, and the data releases of any other nation they have no choice but to react to the data the ABS posts. To do otherwise would be suicide for their account balance.

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And so it is that the past 24 hours have been really instructive for AUDUSD traders given how sharp the reversal from above the 77 cents was again so savage. That now makes 8 times in the past few months where the AUDUSD has reversed from above 77 cents.

Chart
You'll recall this was why I was wary, along with many others, yesterday in my piece saying it's hard to find reasons to sell the AUDUSD. Clearly the jobs data was a strong one.

But unless or until the Aussie can clear out the selling between 0.7700 and 0.7830 the Aussie is trapped.

What's next is problematic. The outside day suggests further downside. But support in the 0.7580/0.7600 region should remain intact because there is a recognition this data is untrustworthy and the fall in employment also came with an accompanying 5.6% unemployment rate.

On the topside today the resistance is 0.7645/65.

Have a great day's trading

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