AUD/USD struggles to extend early gains on bigger-than-expected drop in Australia's Unemployment Rate

A bigger-than-expected drop in Australia's jobless rate struggles to draw more substantial buying pressure for the commodity-sensitive Aussie dollar. The pair clocked a high of 0.7764 soon before the data release and was last seen trading at 0.7758, having hit a low of 0.7724 on Wednesday. 

Australia's jobless rate dipped to 6.4% in January, versus expectations for a drop to 6.5% from December's 6.6%. However, the economy added 29.1K jobs in January versus expectations for 40K additions, marking a slowdown from December's job growth of 50K. Fulltime Employment rose 59K in January versus 35.7K in December. 

The decline in the jobless rate is likely being overshadowed by the slowdown in the job growth and keeping buyers from putting a strong bid under the AUD. 

Nevertheless, the path of least resistance appears to be on the higher side given the expectations of a new commodities boom driven by a rebounding global economy, massive stimulus, and supply shortages. Copper, oil, and other commodities have already rallied to multi-month highs in recent days, lending support to the Aussie dollar. 

However, a continued rise in the US 10-year Treasury note may complicate matters for AUD/USD bulls. The benchmark yield has risen by 20 basis points this month on the back of rising oil prices and upbeat US data. It is trading at 1.26% at press time, having declined from 1.33% to 1.27% on Wednesday. 

Technical levels