AUD/USD – Little Movement Ahead of Key US Job Reports

The Australian dollar is unchanged on Friday, as AUD/USD trades at 0.7150 in the North American session. Taking a look at economic releases, the RBA released a policy statement early on Friday. The markets are keeping a close watch on US employment data, as Nonfarm Payrolls and the unemployment rate will be released later on Friday.

Australia has been hit hard by weaker global demand, particularly from China, Australia’s largest trade partner. With the economy marked by sluggish growth and low inflation, there was speculation that the RBA might lower rates this week, but the central bank held back. Still, the RBA could take action in December and cut rates, which are presently at 2.00%, considered ultra-low by RBA standards. On Friday, the RBA released its monthly policy statement, which noted that inflation levels remain low, and expressed concern about weak Asian demand.

All eyes are on US Nonfarm Payrolls, which will be released on Friday. NFP is expected to rise sharply to 181 thousand, so the dollar could be a big winner as we wrap up the trading week. However, the markets haven’t forgotten the dismal NFP report in September, which came in at 142 thousand, well short of the estimate of 201 thousand. Will the forecast for the October release be more accurate? Aside from employment numbers acting as an important gauge of the US economy, these releases have added significance, since strong job numbers will increase the likelihood of a rate hike in December. Conversely, a poor performance will damper expectations of a move by the Fed before 2016. Traders should be prepared for volatility after the Nonfarm Payrolls release.

On Thursday, US unemployment claims disappointed, as the key indicator jumped to 276 thousand, way above the forecast of 263 thousand. This marked a 5-week high. Still, recent jobless claim releases point to close to full employment in the US, and the four-week average of jobless claims, which is less volatile than the weekly release, remains at its lowest level since December 1973. The unemployment rate stands at just 5.1%, and is expected to nudge lower to an even 5.0%.

AUD/USD Fundamentals

Friday (Nov. 6)

• 00:30 RBA Monetary Policy Statement
• 1:00 RBA Assistant Governor Malcolm Edey Speaks
• 13:30 US Average Hourly Earnings. Estimate 0.2%
• 13:30 US Nonfarm Employment Charge. Estimate 181K
• 13:30 US Unemployment Rate. Estimate 5.0%
• 20:00 US Consumer Credit. Estimate 17.6B
• 21:15 FOMC Member Lael Brainard Speaks

*Key releases are highlighted in bold

*All release times are GMT

AUD/USD for Friday, November 6, 2015

AUD/USD November 6 at 10:20 GMT

AUD/USD 0.7146 H: 0.7170 L: 0.7153

AUD/USD Technical

• AUD/USD was flat in the Asian session and has posted marginal gains in the European session.
• The round number of 0.71 remains a weak support level.
• 0.7213 is an immediate resistance line.
• Current range: 0.7100 to 0.7213

Further levels in both directions:

• Below: 0.7100, 0.7060 and 0.70
• Above: 0.7213, 0.7440, 0.7664 and 0.7770

OANDA’s Open Positions Ratio

AUD/USD ratio is unchanged, consistent with the lack of movement from the pair. Long positions continue to have a solid majority (58%), indicative of trader bias in favor of the Australian dollar moving to higher levels.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.