AUD/USD stops bleeding, job numbers next

The Australian has reversed directions on Wednesday. Early in the North American session, AUD/USD is trading at 0.7186, up 0.34% on the day. The pair started the week poorly and was down 1.1% at the close of the Tuesday session.

Markets brace for soft job numbers

The Australian labour market has been on a tear, with the economy creating some 436 thousand jobs since June. Without question, this is an impressive streak, but it has barely covered half of the staggering job losses in April and May, which totalled 882 thousand. The uptrend could come to a crashing halt in September, with the release of Employment Change on Thursday (00:30 GMT), with a forecast of -38.0 thousand. As well, the unemployment rate is projected to rise to 7.0% from the current 6.8 per cent.

In what may become overshadowed by the employment releases, Australia will publish MI Inflation Expectations (00:00 GMT, Thursday), an important gauge for measuring actual inflation levels. The indicator jumped to 4.6% in March, but has dropped steadily since, falling to 3.1% in August. We now await the September data.

China inflation expected to fall below 2%

The Australian dollar has soared 15.8% since April, even with a slide of 2.8% in September. An important contributor to this rally has been the robust recovery in China, which is Australia’s number one trading partner. The Aussie is sensitive to key Chinese releases, so traders will be keeping an eye on China CPI, which will be released on Thursday (1:30 GMT). Inflation came in at a robust 5.4% in January, but slowed to just 2.4% in August. The downtrend is expected to continue in September, with an estimate of 1.9 per cent. A lower reading than expected could weigh on the Australian dollar.

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AUD/USD Technical

• There is weak resistance at 0.7197. The next resistance line is at 0.7234
• We find support at 0.7136. This is followed by support at 0.7113, which is protecting the 0.71 level
• AUD/USD continues to flirt with the 50-day MA. The pair has pushed above this line on Wednesday, which signals an uptrend

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