AUD/USD – Promising jobs and housing data from the US

• US jobless claims fall last week
• Australian employment unexpectedly falls in December
• A head and shoulders potentially forming in AUDUSD

Data from the US today has been a little positive, although, in the case of jobless claims, it’s hard to say at this stage how much. Initial claims unexpectedly fell below 200,000 but arguably more promising, continuing claims have continued to edge down which suggests the market for those laid off has improved slightly.

The housing data trend is also looking better than it has for some time which suggests, as interest rates start to fall, we should see a pickup in the market once again.

Markets look kindly on weaker Australian jobs data

Australian jobs data overnight was a good reminder that, as far as the economy is concerned, bad news is good news for investors. Ultimately, it’s inflation that will determine whether central banks start cutting rates but not every country will manage to get inflation to target while the economy performs well, as it looks like the US is on course to do.

As a result, weaker labor market figures and general economic performance are being well received at the moment in the hope that it convinces policymakers that they have succeeded in cooling demand and will achieve their goal of price stability. The Aussie dollar declines suggested the jobs data succeeded a little in that.

Head and shoulders forming?

The AUDUSD has trended lower since the turn of the year but has once again run into support around 0.6520 where it did earlier in December.

AUDUSD Daily

Source – OANDA

A break below here and the 61.8% Fibonacci retracement level could be a bearish signal considering how significant a hurdle it’s been since the end of August. Alternatively, a move higher from here will draw attention back to 0.67 where the price briefly peaked at the start of December. A rotation off here may suggest a head and shoulders is forming which, if completed with a break of the neckline – at 0.6520 – could be a very bearish development.

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