Early this morning, the Australian Bureau of Statistics (ABS) published its labour force survey for September. In the report, it was stated that headline unemployment had increased by 0.1 per cent from a month prior, reaching 6.9 per cent.
Even though this measured a smaller rise in overall unemployment compared to the 7.0 per cent projected by the initial forecasts, there is little room for optimism. The Australian labour market lost a total of 29.5 thousand jobs in September compared to the 129.1 thousand jobs that were added a month prior.
The Australian labour market managed to register a tentative recovery in the wake of the initial coronavirus hit; however, employment conditions remain tight. According to the economic projections of the Reserve Bank of Australia, the unemployment rate is likely to reach 10 per cent by the end of the year.
Muted economic forecasts stemming from the deteriorating global prospects for recovering due to the coronavirus pandemic are exerting heavy pressure on the Australian dollar.
As can be seen on the hourly chart below, the AUDUSD currently finds itself in a robust downtrend. The price action recently broke down below the descending channel's lower boundary, which confirms the existence of solid selling pressure.
The descending channel itself manifests a bearish 1-5 impulse wave pattern, as postulated by the Elliott Wave Theory. The price action is currently in the process of finalising the last impulse leg (4-5), which could provide a temporary respite for the pair.
Once the 1-5 pattern is concluded, the market is likely to develop a minor bullish pullback, which could see the price action accelerating towards the channel's upper boundary.
The major support at 0.71000 seems like a favourable level for this owing to its prominence as a well-established turning point. However, this should not be interpreted as a buying signal at the current spot price.
As can be inferred from the MACD indicator, the underlying market momentum remains ostensibly bearish, which means that the price could test, and indeed break down below the major support level.