AUD/USD – Aussie Punches Past 77 on Sharp Australian Job Numbers

The Australian dollar has recorded slight gains on Thursday, as AUD/USD trades slightly below the 0.77 level. On the release front, Australian Employment Change jumped 26.2 thousand and the unemployment rate edged down to 5.7%. Over in the US, there are two key events on the calendar – the Philly Fed Manufacturing Index and Unemployment Claims.

Australian employment numbers sparkled in July, boosting the Australian dollar on Thursday. Employment Change jumped 26.2 thousand, crushing the estimate of 10.2 thousand. This marked the sharpest gain since October 2015. However, the rise was made up of part-time jobs, as full-time positions actually dropped. There was also positive news from the unemployment rate, which dipped to 5.7%, down from 5.8% a month earlier. The strong job numbers will be welcome news to the RBA, which cut rates to an all-time low of 1.50% earlier this month and would like to avoid another cut at its next policy meeting in September.

The markets may be confused about whether the Federal Reserve is planning a rate hike, and it seems that the lack of clarity extends to Fed policymakers as well. The Fed minutes from the July meeting indicated that FOMC members are divided on the timing of a rate hike – some want to raise levels soon, as the US labor market approaches full employment, while others expressed concern about making a move with inflation levels well below the target of 2%. This debate will need to be resolved one way or another, as the Fed must make a rate decision next month. Clearly, policymakers will be swayed by economic data, particularly employment and inflation numbers. The news remains bleak on the latter front, as underscored by July’s consumer inflation reports. CPI posted a weak reading of 0.0%, its worst showing in five months. Core CPI dropped to 0.1%, shy of the estimate of 0.2%. Recent data is pointing in all directions, which explains why the Fed is divided over the timing of a rate hike. After a soft GDP report in late July, nonfarm payrolls was stellar. However, this was followed by weak retail sales and CPI numbers. Bottom line? A September hike is virtually off the table, while the odds of a December hike are pegged at 50/50.

AUD/USD Fundamentals

Wednesday (August 17)

• 21:30 Australian Employment Change. Estimate 10.2K. Actual 26.2K
• 21:30 Australian Unemployment Rate. Estimate 5.8%. Actual 5.7%

Thursday (August 18)

• 8:30 US Philly Fed Manufacturing Index. Estimate 1.4
• 8:30 US Unemployment Claims. Estimate 269K
• 10:00 US CB Leading Index. Estimate 0.3%
• 10:05 FOMC Member William Dudley Speaks
• 10:30 US Natural Gas Storage. Estimate 26B

*Key releases are highlighted in bold

*All release times are EDT

AUD/USD for Thursday, August 18, 2016

AUD/USD August 18 at 6:55 EDT

Open: 0.7662 High: 0.7723 Low: 0.7646 Close: 0.7689

AUD/USD Technical

• AUD/USD posted considerable gains in the Asian session. The pair has given up some of these gains in European trade
• 0.7701 is a weak resistance line
• 0.7560 is providing strong support
• Current range: 0.7560 to 0.7701

Further levels in both directions:

• Below: 0.7560, 0.7440 and 0.7339
• Above: 0.7701, 0.7835, 0.7938 and 0.8045

OANDA’s Open Positions Ratio

AUD/USD ratio is unchanged on Thursday. Currently, short positions have a majority (54%), indicative of trader bias towards the pair reversing directions and moving lower.

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.