The Australian Dollar is trading lower on Thursday after giving back earlier gains. The previous session, the Aussie touched its lowest level since August 31 before rebounding into the close.
The catalyst behind the price action on Wednesday was the weaker U.S. Dollar. It was pressured by uncertainty as traders looked to next week’s Federal Reserve policy meeting for indications on how soon the U.S. central bank will start to taper stimulus.
At 09:43 GMT, the AUD/USD is trading .7315, down 0.0019 or -0.26%.
Also weighing on the Australian Dollar were lower Dalian iron ore prices, which slumped to a new low for the year.
Traders were also unimpressed by the country’s mixed labor market report for July. The employment change fell more than expected, but the unemployment rate unexpectedly fell sharply. Nonetheless, traders dismissed the drop in the jobless rate after the statistics bureau said the change reflected a drop in the participation rate rather than a strengthening of the labor market.
China Iron Ore Futures Plunge to Over 9-Month Low on Falling Steel Output
Iron ore futures in China hit a nine-month low on Wednesday as steel output in the top producer continued to slide, compounding concerns around demand for the raw material.
China’s monthly crude steel production slipped for the third straight month to 83.24 million tonnes in August, data from the National Bureau of Statistics showed, sending average daily output to the lowest since March 2020.
The drop in iron ore prices may be capping gains in the Australian Dollar.
Australian Employment Slides in August as lockdowns Slash Workers’ Hours
Australian employment dived in August as coronavirus lockdowns in Sydney and Melbourne forced businesses to lay off workers and slash hours, while the jobless rate was nudged lower by a sharp fall in the number of people looking for work, Reuters reported.
Thursday’s data from the Australian Bureau of Statistics (ABS) showed employment fell by 146,000 in August, compared to median forecasts of a drop of 90,000.
The unemployment rate dipped to 4.5%, having already fallen to 4.6% in July when lockdowns also distorted data.
The ABS cautioned that the dip in the jobless rate was due to people dropping out of the labor force given how difficult it was to look while in lockdown. Only people actively looking for work are counted as unemployed, Reuters reported.
“The fall in the unemployment rate reflects a large fall in participation during the recent lockdowns, rather than a strengthening in labor market conditions,” said Bjorn Jarvis, head of labor statistics at the ABS.
“Hours worked data continues to provide the best indicator of the extent of labor market impacts and recovery from lockdowns,” he added.
Hours worked in August slip 3.7% nationally, and by 6.5% in New South Wales where Sydney was closed for the entire month.
Likewise, the participation rate fell a steep 0.8 percentage points to 65.2%, while underemployment jumped a full point to 9.3% as workers’ hours were restricted.
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This article was originally posted on FX Empire