AUD extends gains ahead of all-important US labour market update
Daily Currency Update
The Australian dollar extended its recovery through trade on Thursday, consolidating a break back above US$0.6350 as markets take stock of recent USD gains. After the turmoil and volatility of recent days markets appeared content in taking stock and breath ahead of tonight’s all important US labour market update. Price action across bond and equity markets calmed allowing the AUD to claw back losses and push off lows below US$0.63. The AUD has been one of the best performers through the last 24 hours, outpaced only by the NZD, rising steadily to mark intraday highs at US$0.6380.With little of note on the domestic ticket our attentions turn now to US labour market data. Non-farm payrolls will prove critical in governing near-term direction. With markets now preparing for a period of higher interest rates, a strong read will all but guarantee the US Federal Reserve will raise rates again in 2023, while a softer read could help elevate the AUD amid calls for the Fed to call an end to the tightening cycle.
Key Movers
The US dollar is weaker this morning having retreated through trade on Thursday as markets take stock ahead of tonight’s all-important non-farm payroll print. With price action across equities and bond markets calmed, investors were afforded a chance to breathe, opening the door for other majors to claw back recent losses. The euro extended its break back above 1.05, pushing toward and through 1.0550 before meeting resistance. The British pound pushed off intraday lows approaching 1.21, rallying strongly through the overnight session and falling just short of a break above 1.22. The USD even gave up more ground to the Japanese yen, gapping lower at the Tokyo open, suggesting another round of BoJ intervention. Markets are wary of extending recent gains against the JPY after Tuesday's flash crash, where the USD gave up over 2% just seconds after punching above 150.Our attentions turn now to US labour market data. Non-farm payroll numbers are expected to show an increase of nearly 170,000, while unemployment should remain steady near 3.8%. A stronger than anticipated read will underpin the recent narrative and likely see the USD stretch its legs into the weekly close, while a soft print could help to undermine recent gains and create scope for an extension in the recovery of other majors.
Expected Ranges
- AUD/USD: 0.6270 - 0.6420 ▲
- AUD/EUR: 0.5980 - 0.6120 ▲
- GBP/AUD: 1.9000 - 1.9300 ▼
- AUD/NZD: 1.0650 - 1.0750 ▼
- AUD/CAD: 0.8680 - 0.8780 ▲