Increasing Unemployment, Decreasing Commodity Prices Portend Jawboning By the Reserve Bank of Australia

(This is an excerpt from an article I originally published on Seeking Alpha on February 13, 2014. Click here to read the entire piece.)

So much for a trough in unemployment in Australia. The Australian Bureau of Statistics (ABS) produced another poor employment report. In January, Australia lost another 3,700 jobs, and the number of unemployed people increased by 16,600. Moreover, the employment rate edged higher to 6.0%. Unemployment in Australia is now marginally above the post-crisis high and overall at a near 11-year high.

Source: St. Louis Federal Reserve

The Australian dollar (FXA) fell immediately in response to the poor numbers. AUD/USD quickly dropped out of bullish territory (above 0.90), putting me right back in the bearish camp on the currency.

Source: FreeStockCharts.com

Commodities are adding to the pressure on the Australian dollar. {snip}

Source: RBA Index of Commodity Prices

{snip}

Source: Macro Business

Meanwhile, iron inventories are on the rise in China portending further declines ahead in iron ore prices. {snip}

All these woes might indicate a higher potential for the RBA to start cutting rates again. However, inflation is creeping higher in Australia, and the RBA parked its rate machine into neutral in its last statement on monetary policy. {snip}

Be careful out there!

(This is an excerpt from an article I originally published on Seeking Alpha on February 13, 2014. Click here to read the entire piece.)

Full disclosure: not short Australian dollar