AUD/USD loses ground as Australian unemployment rate climbs

Australian dollar fell for a second day against its US counterpart on Thursday, after a report said that Australian rate of unemployment rose in November and despite that economy added more new jobs than initially projected during the same month.

AUD/USD slid to a session low at 0.9011 at 3:50 GMT, after which consolidation followed at 0.9025, losing 0.27% for the day. Support was likely to be received at December 6th low, 0.8990, while resistance was to be encountered at December 11th high, 0.9152.

According to a report by the Australian statistics bureau, the rate of unemployment in the country rose to 5.8% in November in consonance with expectations and matching the highest level since 2009. In October the rate was 5.7%. Unemployment appears to be economys weakest spot, after the investment boom in the sector of mining waned. Some analysts suppose that the jobless rate in Australia may exceed levels, recorded during the financial crisis period. Australian companies, operating in the mining sector, have laid off thousands of employees and shut down mines, after demand for raw materials by China, Australias largest export partner, decreased.

Manufacturing sector in the country has also been hurt by the high exchange rate of the Australian dollar. This leads to increased expenditures of foreign manufacturing companies, which renders Australia unattractive for their business operations.

At the same time, Australian economy managed to add 21 000 new job positions in November, which outstripped the projected 10 000 new jobs, after in October 700 jobs have been lost.

“The downtrend we’ve seen in Aussie-U.S. will resume,” said Michael McCarthy, chief strategist at CMC Markets in Sydney, cited by Bloomberg News. “The acceleration of growth in the U.S. is certainly above Australia at the moment.”

According to Bloomberg, architects of the Australian dollar’s float in December 1983 said that the national currency should be devalued and economic reform – renewed, in order to prevent a recession. Peter Jonson, adviser of central banks Governor of the time, and Ross Garnaut, who counseled then-Prime Minister Bob Hawke, suggested that the resource investment boom has caused Australia to lose competitiveness.

The yield on Australian three-year government bonds dropped four basis points, or 0.04 percentage point, to reach 3%, while the yield on nations 10-year bonds declined three basis points to reach 4.32%.

Meanwhile, retail sales in the United States probably rose 0.5% in November compared to October, according to the median estimate of experts, following a 0.4% gain during the preceding month. The official figures are scheduled for release at 13:30 GMT today.

The US dollar remained supported, after US policymakers unveiled an agreement to ease automatic spending cuts by about 60 billion USD over two years and cut nation’s deficit by 23 billion USD. US Senator Patty Murray, a Democrat, and Republican Representative Paul Ryan said that the budget proposal could prevent a government shutdown and could favor economy. The agreement sets a budget ceiling for the fiscal 2014 at 1.012 trillion USD and for the fiscal 2015 – a ceiling at 1.014 trillion USD.

Elsewhere, the Aussie was lower against the euro, with EUR/AUD cross gaining 0.15% on a daily basis to trade at 1.5261 at 8:15 GMT. AUD/NZD pair was down 0.39% to trade at 1.0920 at 8:16 GMT, after earlier touching its lowest level since October 2008 at 1.0893. Australian dollar has depreciated 12% during this year, or demonstrating the worst performance after the Japanese yen among 10 developed-nation currencies, which are tracked by Bloomberg Correlation Weighted Indexes.

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