ASX 200, AUD/USD Plunge As Unemployment Rates Rise to 22-Year High

AUSTRALIAN UNEMPLOYMENT DATA, COVID-19, STAGE 4 RESTRICTIONS, AUD/USD – KEY POINTS:

  • ASX 200, AUD/USD might continue sliding ahead of the government’s economic address on July 23.
  • Regional sentiments have without a doubt soared as COVID-19 cases in Victoria continue surging.
  • The Australian dollar fell despite the record increase in the number of jobs created in June as the jobless rate rose by 7.4%, slightly exceeding the 7.3% expectation.

ASX 200, AUD/USD, Plunge on Domestic Employment Data

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ASX200

ASX 200, AUD/USD Plunges on Domestic Employment Data

The AUD declined as the jobless rate rose to 7.4%, which was the highest level since year 198, even though the economy has added about 210,800 jobs back in June.

While the local employers hired at the recorded clip back in June, full-time roles undoubtedly reduced (-38.1K) at the expense of part-time employment (+249K), proposing the doubtful economic look that is forcing business to remain largely fluid with the second wave of coronavirus infections that is threatening to stop reopening efforts.

Optimistic Chinese economic data have done very little to maintain the Australian dollar, which is highly trading sensitive. Even though the GDP expanded a staggering 11.5% in Q2 of 2020, the regional investors continue monitoring domestic health developments before the government’s economic statement on 23 July.

Australian Job Rate

data

Coronavirus Weighing On Confidence of Consumers

Victoria’s prime minister, Daniel’s address made comments largely flagging the possible imposition of harsh stage four restrictions has greatly weighed on business and consumer confidence with the Westpac consumer sentiment index declining by 6.1% in July, this is after it had claimed to 6.3% in June.

As Victoria, which is Australia’s second most populated state, records 11 consecutive days of more increments in coronavirus cases, more concern is brewing that six weeks of phase 3 restrictions might not be sufficient to confidently stop the virus.

WestPac Consumer Index

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Source – Trading Economics

WESTPAC CONSUMER INDEX

Brett Sutton, who is the chief health officer partly tamed panic and stressed to do, the least needed because its evident how much of the imposition it on people’s lives and businesses. Nevertheless, the chief health officer further stated that if it is what will help curb the virus transmissions, then the imposition of the stage 4 restrictions will without a doubt be implemented. Also read Australian Dollar Plunged Down After Change in Employment Economic Release.

With the latest restrictions having been found to cost the government about $1 billion per week, the imposition of more harsh measures in victoria, that contributes the second-largest amount in Australia’s GDP will adversely affect the domestic economic recovery and might pressurize the government to re-impose more substantial second stage of monetary support that considers the Victorian circumstances.

AUDUSD-ASX-200

In this regard, Josh Freydenberg, who is the treasury has scheduled a new economic address which will be crucial in the determination of the path towards the zones risk assets as they schedule to showcase the second stage of the income support that is supported by the same principles which have defined the current economic measures.

Failure to sufficiently meet the economic need for more stimulus might crystallize the reality, which means that Australia is on the route to a monetary cliff edge by late September.

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