Australian dollar steady ahead of NFP

The Australian dollar has posted small gains today and is trading at 0.6816. After starting the week with sharp losses, AUD/USD has rebounded and hit a 13-week high on Thursday, at 0.6845.

All eyes on US nonfarm payrolls

Today’s highlight is the US nonfarm employment report, with a consensus of 200,000 for November. This follows a 261,000 gain in October. The US employment market has been surprisingly resilient, considering the sharp rise in interest rates. The employment market has recently started to cool off, but unless today’s NFP release significantly underperforms, it won’t change the Fed’s view that it is still too early to tell if inflation is on its way down.

Jerome Powell’s speech on Wednesday sent the US dollar sharply lower, as Powell’s comments were not as hawkish as feared. Powell said that more evidence was needed to show that inflation was falling, and reiterated that rates would likely rise higher than the Fed has projected in September. Still, investors chose to focus on Powell’s broad hint that the Fed would ease the pace of rates next week with a 50-bp move, after four straight hikes of 75 bp.

Reserve Bank of Australia Governor Lowe issued a shocking apology about rate policy earlier in the week. Lowe said that it was regrettable that people listened to the RBA saying it wouldn’t raise rates before 2024. but then delivered seven oversized rate hikes in 2022. Many Australians took out mortgages based on the RBA assurance but are now getting squeezed by huge mortgage payments. The RBA meets next Tuesday and is widely expected to raise rates by 25-bp, which would bring the cash rate to 3.10%.

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AUD/USD Technical

• AUD/USD testing resistance at 0.6829 earlier today. Above, there is resistance at 0.6903
• There is support at 0.6707 and 0.6633

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