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AUD edges higher ahead of US non-farm payroll data

Friday 6 August, 2021

Daily Currency Update

AUD - Australian DollarThe Australian dollar crept back toward 0.74 US cents overnight, emboldened by an uptick across bond yields and risk assets. Having struggled to break beyond 0.7380 through the domestic session, the Aussie stretched to intraday highs at 0.7415, outperforming most other major counterparts. There seems little reason for the improvement in market sentiment, particularly as the impact of COVID’s delta strain reverberates around the world. China has increased travel restrictions across Beijing as its daily case numbers begin to rise again, while infection rates across the US continue to climb, particularly across areas with low vaccination rates. In positive news Moderna reported its MRNA vaccine remained 93% effective against the current COVID strains even 6 months after receiving a second dose. Given the pandemic backdrop, last night's move appears to be markets positioning themselves ahead of tonight’s all important US payroll report. We expect sensitivity surrounding the release as markets look to labour market data as a leading indicator for Fed policy. The FOMC has noted that the timing of a tapering in QE is directly linked to labour market performance. A strong print could force the AUD back below 0.74 and toward supports at 0.7290.

Key Movers

The US dollar drifted lower overnight as the CAD, AUD and NZD all outperformed amid a modest uptick in demand for risk assets. There appears little reason for the appreciation in risk demand and admittedly ranges have been well contained as markets shift their focus to tonight's US payroll print. The Great British pound extended back beyond 1.39, testing 1.3950 after the Bank of England policy meeting. While policy makers elected to maintain the current policy setting, they suggested that modest rate hikes might be needed as early as next year, adding that it intended to stop reinvesting maturing bonds in a bid to reduce the QE balance sheet, winding back stimulus measures. The surprisingly open assessment of future monetary policy plans surprised markets and helped fuel demand for sterling. With little price action across other major pairs, our attentions turn now to tonight’s non-farm payroll data. With fed policy directly linked to labour market performance we expect a high degree of sensitivity and price action following the data drop.

Expected Ranges

  • AUD/USD: 0.7290 - 0.7480 ▲
  • AUD/EUR: 0.6170 - 0.6320 ▲
  • GBP/AUD: 1.8580 - 1.8920 ▼
  • AUD/NZD: 1.0470 - 1.0520 ▲
  • AUD/CAD: 0.9220 - 0.9290 ▲