Employment growth continues in Australia, which rose by 70.7K jobs in March, dropping the unemployment rate to 5.6%, down from 5.8% in February. Employment has rebounded strongly in recent months, in line with a broad recovery in economic activity.
The strength in employment comes as business conditions rose to a record high in March, bringing with it the strongest consumer confidence readings in a decade.
However, a major challenge looms for the job market after the federal government ended the wage subsidy program known as JobKeeper at the end of March, which could lead to a rise in the unemployment rate again in April, but expectations indicate that any downside reversal will be in brief, especially as vacancies remain strong and underemployment is declining.
RBA is likely to welcome the improvement in the labor market, but there is still a lot of spare capacity that will take a lot of time to get rid of. RBA is currently indicating no change in interest rates for another three years, saying that it needs to see a return to full employment and stronger wage growth and for inflation to return sustainably to its 2% -3% target range.
AUDUSD is currently trading at its highest level since March 22, around 0.7750 levels, following the completion of an inverted head and shoulders pattern on the 4H chart, and it is expected that prices would be heading to 0.7800 the pattern’s target. However, prices may witness some corrective drop to 0.7700 before rising again.