AUD/JPY pops and drops on mixed Aussie jobs report
- AUD/JPY sees two-way business following Australia's jobs report.
- While the jobless rate rose less-than-expected, the economy shed record jobs.
- The Participation Rate ticked higher, taking the shine off the better-than-expected jobless rate.
AUD/JPY jumped 10 pips to 69.15 only to fall back quickly to 68.91 after the official data showed Australia's jobless rate rose less-than-expected in April, but the economy shed a record number of jobs.
Australian economy shed 594.3K jobs, versus expectations for a 575K drop, following March's 5.9K additions. The seasonally adjusted jobless rate ticked higher to 6.2% versus expectations for 8.3% and March's figure of 5.2%. Moreover, the economy was put in lockdown in April contain the coronavirus outbreak. Hence, the labor market deterioration was expected.
The pop seen on the back of the better-than-expected jobless rate was short-lived, as the Participation Rate fell to 63.5% in April from March's 66%.
The record job losses are likely to keep AUD/JPY on the defensive during the day ahead. The broader market sentiment has been dented this week with prominent investors like Stanley Druckenmiller raising questions about the market’s current valuation.
Further, the US health authorities have poured cold water over the optimism generated by the Trump administration's plan to reopen the economy by warning of a possibility of the second wave. What's more, Federal Reserve's Chairman Jerome Powell, on Wednesday, dashed hopes for negative rates but said that the path ahead is both highly uncertain and subject to significant downside risk.
As a result, growth-linked currencies like the AUD are likely to remain under pressure. At press time, AUD/JPY is trading near 68.95.