AUD/USD drops back towards 0.6950 on mixed Australia employment numbers

• AUD/USD retreats towards intraday low despite teasing the first weekly gain in five amid mixed Aussie jobs report.
• Australia Employment Change eased below forecasts and prior while Unemployment Rate refreshed record low in April.
• Repeated Fedspeak over 50 bps joins softer yields to weigh on USD amid sluggish markets.
• Risk catalysts will be crucial to watch for clear directions, US second-tier data eyed too.

AUD/USD pares intraday gains around 0.6960 as the Aussie jobs report flashed mixed reports during early Thursday. Also challenging the pair moves is a lack of major data/events elsewhere as well as a softer USD.

That said, Australia’s headline Unemployment Rate marched 3.9% forecast while refreshing the all-time low but a fall in the Employment Change to 4K, versus the market consensus of 30K and 17.9K prior, seems to have weighed on the AUD/USD prices. It’s worth noting that the softer-than-expected prints of the Aussie Wage Price Index for Q1 2022 probed the RBA hawks the previous day.

Read: Australian labour report leavs AUD sidelined, so far

Given the softer Employment Change and Wage Price Index , the RBA’s 40 bps rate hikes are questionable at the moment, which in turn probes the AUD/USD pair’s recent corrective pullback. It’s worth noting that the risk-aversion wave and downbeat conditions at the largest customer China, due to the covid resurgence, weigh on the AUD/USD prices. Recently, Shanghai’s refrain from total unlocks joined fresh virus-led activity restrictions in Tianjin, the port city near Beijing to portray COVID-19 woes.

Additionally, inflation woes in the developed nations join the geopolitical fears surrounding Russia to sour the sentiment and exert downside pressure on the AUD/USD prices.

Even so, An absence of major data/events and repeated comments from the Fed policymakers seemed to have recently paused the risk-aversion wave. That said, US 10-year Treasury yields dropped 11 basis points (bps) to 2.88% the previous day, mostly unchanged at around 2.89% by the press time of Thursday’s Asian session, whereas S&P 500 Futures drop 0.50% at the latest. It should be noted that the US Dollar Index (DXY) drop 0.14% around 103.77 by the press tie.

Having witnessed an initial reaction to the Aussie jobs report, which matched market forecasts, AUD/USD sellers are likely to return amid Wednesday’s Q1 2022 Wage Price Index and the risk-off mood. This emphasizes today’s risk catalysts and the US second-tier data relating to housing and manufacturing to forecast the pair moves.

Technical analysis

AUD/USD sellers attack short-term key support around 0.6960 as traders struggle to pare the biggest daily loss in a week.

A confluence of the 100-HMA and a weekly rising trend line, around 0.6960, restricts the immediate downside of the AUD/USD prices, a break of which will quickly direct bears towards the 0.6900 threshold ahead of highlighting the monthly low near 0.6830.

Meanwhile, recovery remains elusive until the AUD/USD prices cross a two-week-long horizontal resistance area near 0.7040-60.