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AUD/USD – Is the Breakout For Real?
The Aussie took out the 7700 in the wake of better than forecast employment data, but as we noted earlier,”Although the headline numbers looked upbeat, the underlying data was far less bullish than it would appear. All of the gains were actually in part time jobs and full time employment actually shed -8.8K positions. Furthermore the trend growth data which is designed to smooth the noisy month to month results is showing a deceleration in growth to 2.2% in March from 2.6% in December of last year. Lastly the the trend monthly hours worked in all jobs series decreased by 1.8 million hours (0.11%) to 1,643.7 million hours.
None of these data points were unabashedly bullish and Aussie actually sold of a bit in the aftermath of the release, but the unit found a very strong bid in European trade climbing more than 70 points in a few hours. The net takeaway from today’s AU employment report is that despite the deceleration in job growth trend the RBA will remain stationary for the foreseeable future protecting Aussie’s 2% yield and which will in turn attract more carry trade flows into the pair.”
Tonight the market could get a confirmation of stabilizing forces in Asia when China reports its GDP and IP figures. If the numbers are generally in line, the Aussie could get a further boost and move towards the 7750 level indicating that the breakout is indeed for real.