CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Bumper AU jobs data and China rate cut ignite AUDNZD

January 20, 2022 3:35 AM

As noted in our preview yesterday, the survey reference period was November 28th to December 11th, pre the surge in Omicron cases in late December. As such, the impact of Omicron will not be seen until the January and February jobs data and result in a renewed, albeit temporary, hit to employment.

The recovery in the labour market sees the level of employment now 0.5% above pre-Delta levels. At this pace the unemployment rate is set to fall below 4% in the coming months and almost certainly spells the end to the RBA’s QE program in February.

During the second half of 2021, the Reserve Bank of Australia noted on many occasions that a tighter labour market was required to lift wages growth as a prerequisite to raising interest rates.

Based on today's data, wages growth should accelerate towards 3% y/y by the second half of 2022, putting the start of an RBA tightening cycle firmly on the calendar for early in the second half of 2022.

 

The preferred way to play today's robust jobs data is via long AUDNZD, which takes out of the equation some of the event risk of next week's Federal Reserve meeting.

 

Additionally, it incorporates the benefits of Chinese policymakers taking further steps to meet their growth targets by cutting the one-year loan prime rate by 10 basis points to 3.7% and the five-year rate by 5 basis points to 4.6%. It is worth noting that when Chinese authorities set and reaffirm growth targets, they rarely miss them.

 

Technically, the break above resistance/congestion at 1.0650 allows the rally to extend towards the top of the six-month trend channel from the 1.1043 August high at 1.0820.

 

To take advantage of this view, use dips back towards 1.0665/45 to open longs in AUDNZD, looking to take profit 1.0800/20. Stops should be placed below the 2022 range lows at 1.0565.

Source Tradingview. The figures stated areas of January 20th, 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:

  1. 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

  2. Search for the company you want to trade in our award-winning platform 
  3. Choose your position and size, and your stop and limit levels 
  4. Place the trade

 

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024