Australian Dollar Chopped Up on Jobs Data as Market Eyes RBA Action. Will AUD/USD Rally?

The Australian dollar crumbled on the jobs data as the market watches the RBA action. Will AUD/USD Recover?

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AUSTRALIAN DOLLAR, AUD/USD, RBA, NZD/USD, RBNZ, FED – Talking Points

  • The Australian dollar has recovered some lost ground thanks to a good employment report
  • The dial clicked weakly towards a 0.50% rise by the RBA next month.
  • US dollar gyrations continue to impact markets. Where for AUD/USD?

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Trading Forex News: The Strategy

The Australian dollar initially fell and then rallied after today’s jobs report and the odds slightly increased for a 50 basis point hike by the RBA at its next meeting in October.

The unemployment rate for August rose to 3.5% vs. forecast of 3.4% and earlier.

The overall change in employment for the month was 33.5k instead of the forecast 35k. Full-time employment increased by 58.8k, while 25.3k part-time jobs were lost in August.

The participation rate printed as expected at 66.6% but higher than the previous 66.4%.

The reason for the unusual price action immediately following the number was misreporting of statistics by Bloomberg. Someone there might have a rough day. The initial flash had zero jobs added, but the unemployment rate was correct at 3.5%.

Going into the data, the futures market saw a 34 basis point (bps) hike in rates by the RBA for October. Today’s data cajoled it down 35bp.

AUDUSD CHART

Chart created in TradingView

In other parts of the region today, New Zealand Q2 Quarterly GDP reached 1.7%, well above forecasts of 1.0% and against 0.2% previously

New Zealand’s annual GDP through the end of July was 0.4% instead of 0.0% expected and 1.2% previously. The solid pace would appear to support a 50bp hike by the RBNZ at its next meeting on October 5th.

The fallout from a red-hot US CPI figure on Tuesday continues to permeate the markets. Commodity and growth-linked currencies such as the Australian dollar and the Kiwi could be subject to bouts of volatility as the market speculates on how aggressive the Federal Reserve will be at its meeting next week.

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How to trade AUD/USD

AUD/USD TECHNICAL ANALYSIS

At the beginning of the week, AUD/USD challenged a descending trend line but was unable to break above it and may continue to offer resistance, currently dissecting at 0.6840.

The move lower on the back of Tuesday’s US CPI report broke below three break points at 0.6771, 0.6841 and 0.6859. These levels could offer resistance.

That downshift created a bearish envelope Cand mestick. At the same time, the price is below all short, medium and long-term simple moving averages (SMAs) and all SMAs show a negative gradient. This may suggest that bearish momentum could evolve.

Yesterday’s low of 0.6705 was above previous lows of 0.6699 and 0.6681. All three lows are above a break point at 0.6670. This could set up a support zone in the 0.6670 – 0.6705 area.

A move below that region could confirm bearish momentum.

AUDUSD CHART

Chart created in TradingView

— Written by Daniel McCarthy, Strategist at DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX On twitterr



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