AUD/USD retreats towards 0.7000 on mixed Australia Employment report

• AUD/USD extends pullback from intraday high after Australia’s May month job numbers.
• Australia’s Employment Change rose to 60.6K, Unemployment Rate remained static at 3.9%.
• Yields, US dollar extend post-Fed losses to put a floor under the prices.
• China’s search for centralized iron ore seller challenges Aussie bulls, RBA’s Lowe appeared hawkish and keeps buyers hopeful.

AUD/USD pares Fed-inspired gains after the Australian Bureau of Statistics flashed mixed employment data for May during early Thursday. In doing so, the Aussie pair stretches the pullback from intraday high to 0.7013 by the press time.

That said, Australia’s Employment Change rose to 60.6K versus 25.0K expected whereas the Unemployment Rate rose past 3.8% forecasts to 3.9% while matching the previous readings. Further, the Participation Rate also improved to 66.7% versus 66.4% market consensus and 66.3% prior. Earlier in the day, Australia’s Consumer Inflation Expectations rose past 5.0% prior readings to 6.7%.

Read: Australian Unemployment Rate steadies at 3.9% in May vs. 3.8% expected

On Tuesday, Reserve Bank of Australia (RBA) Governor Philip Lowe warned that Australians should be ready for significant interest rate hikes in the balance of this year.

Elsewhere, headlines from the Financial Times (FT) highlight the China-Australia tussles and tested the AUD/USD bulls ahead of the data release. “China is moving to consolidate the country’s iron ore imports through a new centrally controlled group by the end of this year, as Xi Jinping’s administration seeks to increase Beijing’s pricing power over the industry,” said the FT. The news also mentioned that China could in theory reduce its dependency on Australian iron ore by increasing purchases from big Brazilian producers, such as Vale. The news gains major attention as Australia relies heavily on iron ore exports as the key source of income, as well as due to China’s dominance in metal buying.

It should be noted that the US 10-year Treasury yields extend the post-Fed losses, down seven basis points (bps) to 3.33% by the press time, which in turn weighed on the US dollar and enables the AUD/USD bulls to remain positive. However, a lack of major data/events seems to have probed the quote’s immediate upside. While portraying the mood, the S&P 500 Futures track Wall Street’s gains with a 0.82% intraday run-up at the latest.

Looking forward, second-tier US data and the Bank of England’s (BOE) ability to surprise markets, which is less likely, may entertain AUD/USD traders.

Technical analysis

AUD/USD battles with a short-term resistance confluence surrounding 0.7030-35, comprising the multiple levels marked since early May. Given the recent price-positive signals from the RSI and MACD, the buyers are likely to cross the immediate hurdle and brace for the 0.7100 mark.

On the contrary, a downside break of January’s low near 0.6965 could be enough to recall the bears. That said, the 0.7000 threshold acts as an immediate support to watch during the quote’s pullback.