8 May 2014
Australian jobs next: How will AUD/USD react?
FXStreet (Bali) - The Australian Dollar continues to challenge highs above 0.93 ahead of the April Aus jobs report. As commented in varies reports, the Aussie has been emboldened by a conglomerate of drivers, which go from the carry trade theme back in fashion, expectations of rate hikes by the RBA (plus softer rhetoric towards AUD), assets returning into EMs (AUD proxy), all coupled with the broad-based USD weakness.
While the pullback off 0.9450 earlier last month had the danger of distorting the bullish picture built throughout 2014, the latest breakout of a downward channel through 0.9280-0.93 earlier this week has re-adjusted the technicals bullish again.
Are we still in a 'buy on dips' type of market?
Judging by the latest price action in the AUD/USD, one would think so, as last Friday's NFP-induced sell-off was quickly corrected only for the upward tendency to extend into this week. What this means is that based on recent sentiment, an upbeat print in the Australian employment report could cause more pain the the AUD bears than a miss could do to those positioned long in the AUD.
Such assumption does not mean that an downbeat read in today's Australian jobs data (due at 1.30GMT) could be one catalyst that distorts the uptrend, however, it is important not to forget that since the sentiment has turned more bullish in the past few days, it may take a significantly lower-than-expected reading to make some significant damage to AUD longs, as otherwise, on a slight negative deviation, risk remains high that Asia will continue to buy the dips.
For this month, expectations are low with the jobless rate expected at 5.9%, up 0.1% from April, with only between 6-7k jobs created.
Australian jobs: Possible scenarios
Employment change well above 7k: AUD/USD is likely to target 0.9365, a level that converges with May 6 high with further rises likely to encounter big clusters of selling at 0.9380-.94.
Employment change just above 7k: AUD/USD will most likely see a rise to retest 0.9365, with further upside risk towards 0.9380/.94 not being ruled out given that sentiment is on the Aussie side.
Employment change between 0 and 7k: AUD/USD will probably have a tepid reaction, with any shallow downmove most likely to find grateful buyers. 0.9365 could be retested, but no much follow through expected ahead of European trading.
Employment change marginally negative: AUD/USD could see a slide to test levels between 0.93 and 0.9280.
Employment change well below 0: AUD/USD will likely see an abrupt fall towards 0.9280 and probably see follow through for a retest of 0.9260-70.
While the pullback off 0.9450 earlier last month had the danger of distorting the bullish picture built throughout 2014, the latest breakout of a downward channel through 0.9280-0.93 earlier this week has re-adjusted the technicals bullish again.
Are we still in a 'buy on dips' type of market?
Judging by the latest price action in the AUD/USD, one would think so, as last Friday's NFP-induced sell-off was quickly corrected only for the upward tendency to extend into this week. What this means is that based on recent sentiment, an upbeat print in the Australian employment report could cause more pain the the AUD bears than a miss could do to those positioned long in the AUD.
Such assumption does not mean that an downbeat read in today's Australian jobs data (due at 1.30GMT) could be one catalyst that distorts the uptrend, however, it is important not to forget that since the sentiment has turned more bullish in the past few days, it may take a significantly lower-than-expected reading to make some significant damage to AUD longs, as otherwise, on a slight negative deviation, risk remains high that Asia will continue to buy the dips.
For this month, expectations are low with the jobless rate expected at 5.9%, up 0.1% from April, with only between 6-7k jobs created.
Australian jobs: Possible scenarios
Employment change well above 7k: AUD/USD is likely to target 0.9365, a level that converges with May 6 high with further rises likely to encounter big clusters of selling at 0.9380-.94.
Employment change just above 7k: AUD/USD will most likely see a rise to retest 0.9365, with further upside risk towards 0.9380/.94 not being ruled out given that sentiment is on the Aussie side.
Employment change between 0 and 7k: AUD/USD will probably have a tepid reaction, with any shallow downmove most likely to find grateful buyers. 0.9365 could be retested, but no much follow through expected ahead of European trading.
Employment change marginally negative: AUD/USD could see a slide to test levels between 0.93 and 0.9280.
Employment change well below 0: AUD/USD will likely see an abrupt fall towards 0.9280 and probably see follow through for a retest of 0.9260-70.