Make That Trade: AUD/USD Currency Pair Remains Bullish

It’s not every day that so many analysts and currency brokers get things wrong, but when they do it usually takes the form of what we recently witnessed with Australian jobs numbers. This is the second consecutive month of bullish gains by the Australian labor market. As is so often the case with a surprise result like that, the currency is the first beneficiary of the upbeat economic data. Just in case you’re wondering how positive the Labor data was in Australia, consider that analysts were expecting declines in the region of 10,000 job losses, while the actual number of jobs created came in at 71,400. Even more significant is the fact that this is the largest increase in monthly employment in more than 15 years for Australia. Other important information that was gleaned from the labor market report includes the following:

The increase in jobs numbers in October was 56,100, and the increase in November was 71,400, but surprisingly there was a month on month decline of 0.8% in terms of the number of hours worked during November.

The Performance of the AUD/USD Currency Pair

The AUD/USD currency pair is trading at 0.7245. The pair has a year-to-date return of -11.38%, and a 52-week trading range of 0.6896 on the low end and 0.8299 on the high end. The Australian dollar rallied following the release of the jobs data, and this also had the effect of dampening prospects that the Australian Reserve Bank would move to loosen monetary policy in 2016. The AUD hit its straps against a basket of currencies, including all 16 majors. As the jobs numbers were confirmed, the unemployment figure plunged to 5.8%. All of this positive sentiment emanating from the Australian economy is unlikely to cause the RBA to loosen monetary policy in order to stimulate the economy. Instead, the latest Labor data from Australia will likely cause a delay in the implementation of monetary easing, perhaps even leading to quantitative tightening.