The Aussie dipped to fresh decade lows, having accelerated the decline to 0.6630 on Thursday. AUDUSD keeps bleeding for a sixth day in a row already and lost further ground after the official labor market data showed that the unemployment rate rose to a four-month high of 5.3% in January. The report was not so gloomy, as full time employment increased by 46,200. Still, traders focused on the unemployment rate which reversed the declining trend seen since October 2019. The Reserve Bank of Australia needs to see a tighter labor market that could bring a more robust wage growth and consumption. As a result, investors increased bets on a rate cut by the RBA in the coming months, which in turn added to the selling pressure surrounding the Australian currency.
Of note, the Australian economy sees a number of other difficulties at this stage, with wage growth remaining stubbornly weak, the underlying consumer prices stays well below the central bank’s target while GDP growth is still below trend and could get even worse. Despite this, the government refrains from further fiscal stimulus, which only increases the odds of a rate cut by monetary authorities, probably, in April already.
Given this background, it is not surprising that the AUDUSD pair has accelerated the downside move following the release. Besides, the Aussie remains under pressure amid a widespread dollar strength and the lingering uncertainty surrounding the coronavirus and its consequences for the global economy. Of note, due to all these bearish drivers, the commodity-related currency failed to capitalize on a decent recovery in crude oil prices. Brent has registered fresh February highs around $59.70 today and now shows some signs of losing the upside momentum as it looks like traders were spooked by the $60 psychological barrier.
From the technical point of view, AUDUSD may challenge the above mentioned 2009 lows around 0.6630 in the near term. Once below, the pair could challenge the 0.66 handle. On the upside, the Aussie will target the initial resistance at 0.6660 if USD bulls decide to take a pause any time soon.