The Australian dollar: Has normal service been resumed?

  

A big disappointment in the jobless figures for August in Australia, announced overnight (European time), has resulted in a fairly dramatic fall in the Aussie, due to renewed expectations of further reductions in interest rates by the Reserve Bank of Australia as a result. Leading indicators of job growth Down Under in the future are also a cause for concern.

There had been a determined retrace of what was the dominant downward trend in the AUDUSD pair up to the release of the unemployment report. However, as noted here previously, apart from an apparent turnaround in Chinese growth prospects (how can such a large economy turn on a sixpence like that?), nothing else has changed. In particular, US Quantitative Easing (QE) will be tapered, possibly as early as next week. US bond markets have been pricing in this factor for some time. When tapering does start the US dollar is expected to rise (When USD rises, the AUDUSD pair falls). Gold, this morning, is also weaker, another indicator that focus might be back on tapering rather than, for example, the possibility of US airstrikes in Syria.

From the technical point of view, AUDUSD has reached a fairly significant resistance level on the daily chart, as seen here:

Foreign Exchange traders around the world will not have let this go unnoticed.