Thumping AU jobs report supports further gains for AUDNZD

Good news today for the Australian economy as the employment report for June stunned with across-the-board strength.

The economy added 88,400 jobs in June to a new peak of 13.6million, well above expectations for a 30,000 increase. Today's increase was the eighth consecutive rise since lockdown restrictions were eased in the final months of 2021.

The unemployment rate fell from 3.9% to 3.5%, the lowest since 1974, despite the participation rate rising to a new record of 66.8%. The underutilization rate remained at 9.6%, staying at its lowest since April 1982. The only blemish, the underemployment rate went up to 6.1% from May's near 19-year low of 5.7%.

While it's easy to get caught up in today's data, red lights are flashing. The RBA forecast that the unemployment rate would not reach 3.5% until June next year.

The earlier arrival of the unemployment rate at 3.5% suggests that the labour market is hotter than expected. And with the unemployment rate set to edge lower in the second half of this year, the RBA will be keen to curtail its impact on wages inflation and inflation expectations.

As a result, the RBA will likely raise rates by 50bp at its meeting in August (with a real risk of a 75bp rate hike) and by 50bp September, which would take the cash rate to 2.35%, near to the nominal neutral rate thought to be around 2.5%. From there, another 25bp of tightening in October, November and December is expected which would take the cash rate to 3.1% by year-end.

To take advantage of the above-mentioned factors and to take the surging U.S dollar out of the equation and global recession fears, we like buying dips in the AUD/NZD to 1.1040/20, leaning against a band of support 1.0950/20.

A break of near term resistance at 1.1100/10 would open up a retest of the June 1.1168 high with scope to 1.1300.

Source Tradingview. The figures stated are as of July 14^th 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.