Home Daily Commentaries AUD unable to extend break back above US$0.66 as attentions turn to US labour data

AUD unable to extend break back above US$0.66 as attentions turn to US labour data

Daily Currency Update

The Australian dollar continues to trade below US$0.66, unable to hold onto overnight gains despite a broadly weaker US dollar. Having tracked sideways for much of the domestic session, the AUD climbed off intraday lows below US$0.6580 extending back through US$0.66 to touch US$0.6635. Weaker than anticipated US labour market data prompted a correction in 2-and-10-year treasury yields and fostered a US dollar downturn. Despite the weaker dollar the AUD was unable to consolidate the rally, sliding through the last hours of overnight trade to open this morning at US$0.6581. With momentum firmly behind the dollar, markets appear wary in extending AUD gains ahead of tonight’s all-important US non-farm payroll print. With some signs labour market activity is slowing, payroll data will prove critical in determining near term direction. Another robust read will amplify calls for the Fed to accelerate the pace of rate hikes and firm expectations the Fed will lift rates by 50 basis points later this month. With the AUD clinging to supports at US$0.6580 another blockbuster US print could see the AUD extend its recent downturn.

Key Movers

The US dollar faced downward pressure through trade on Thursday following weaker than anticipated US labour market data. US initial jobless claims jumped, surpassing expectations and touched their highest level this year. While poor weather likely elevated numbers, continuous claims climbed to 15-month highs suggesting some of the heat may finally be leaving the labour market. Hopes a downturn in labour market activity will ease pressure on wages and inflation prompted a correction in 2-and-10-year yields. With US rates moving lower the yen advanced forcing the dollar back toward 136.25, while the euro climbed back through 1.0550 and toward 1.06, and the GBP jumped back above 1.19, outperforming all other major counterparts.

Attentions turn now to US non-farm payrolls. Any notable move off market expectations will likely prompt big swings in bonds, equities and currencies as markets re-shape expectations for near term Fed policy. We anticipate the US will have added 225,000 new jobs with unemployment steady at 3.4% and earning data stable at 0.3%.

Expected Ranges

  • AUD/USD: 0.6520 - 0.6680 ▼
  • AUD/EUR: 0.6150 - 0.6320 ▼
  • GBP/AUD: 1.7880 - 1.8220 ▲
  • AUD/NZD: 1.0750 - 1.0850 ▲
  • AUD/CAD: 0.9050 - 0.9150 ▲