AUD/USD – Aussie Steady, US Nonfarm Payrolls Beats Expectations

The Australian dollar is showing little net movement on Friday, as AUD/USD trades at 0.7660. On the release front, Australian AIG Manufacturing Index surged to 58.1 points in March. Commodity Prices continues to decline, coming in at -15.4%. In the US, today’s key events are employment indicators. Nonfarm Employment Change easily beat the estimate of 206 thousand, coming in at 215 thousand. The unemployment rate edged up to 5.0%, while Average Hourly Earnings posted a gain of 0.3%, above the forecast of 0.2%.

The Aussie enjoyed an outstanding month of March, echoing strong gains seen by other minor currencies like the Canadian and New Zealand dollars. The Australian currency surged 7.4 percent against the US dollar, as investors returned to risk after global turmoil early in the year sent investors scurrying to safe-haven assets. There was positive news out of China on Friday, as key manufacturing reports beat expectations. Stronger Chinese demand is vitally important for the resource-based Australian economy, as the Asian giant is Australia’s biggest trading partner.

With the US economy showing respectable growth and the labor market bursting at the seams, why did Federal chair Janet Yellen sound so cautious about the US economy in her speech in New York earlier this week? In her comments, Yellen did acknowledged the strong US labor market, but spoke of risks to the US economy from uncertainty in the global markets and the slowdown in China. Yellen was likely reacting to recent comments by several Fed members, which were very hawkish in tone, some going as far as calling for a rate hike this month. Left unchecked, these comments would likely have created a fever pitch in the markets about an imminent rate hike. If the Fed failed to deliver at its April policy meeting, the result could have led to strong volatility in the markets. Yellen may have poured cold water on any rate hike enthusiasm in order not to rock the markets over rate hike projections. However, this had created another problem – the Fed appears to be talking with more than one voice and sending out contradictory messages to the markets. Will Yellen’s cautious assessment be reinforced or challenged by Fed members? Public comments from Fed officials will be under the market microscope, and any hints of a rate hike in April or June could send the US dollar sharply higher against its rivals.

AUD/USD Fundamentals

Thursday (March 31)

• 18:30 Australian AIG Manufacturing Index. Actual 58.1

Upcoming Key Events

Friday (April 1)

• 1:30 Australian Commodity Prices. Actual -15.4%
• 8:30 US Average Hourly Earnings. Estimate 0.2%. Actual 0.3%
• 8:30 US Nonfarm Employment Change. Estimate 206K. Actual 215K
• 8:30 US Unemployment Rate. Estimate 4.9%. Actual 5.0%
• 9:45 US Final Manufacturing PMI. Estimate 51.5
• 10:00 US ISM Manufacturing PMI. Estimate 50.8
• 10:00 US Revised UoM Consumer Sentiment. Estimate 90.6 points
• 10:00 US Construction Spending. Estimate 0.2%
• 10:00 US ISM Manufacturing Prices. Estimate 44.5 points
• 10:00 Revised UoM Inflation Expectations
• All Day  – US Total Vehicles Sales. Estimate 17.6M
• 12:00 US FOMC Member Loretta Mester Speaks

*Key releases are highlighted in bold

*All release times are DST

AUD/USD for Friday, April 1, 2016

AUD/USD April 1 at 8:30 DST

AUD/USD  Open: 0.7668 Low: 0.7644 High: 0.7701 Close: 0.7660

AUD/USD Technical

• AUD/USD showed choppiness in the Asian session but has recovered in European trade
• 0.7678 remains under pressure as resistance and could break during the day
• 0.7560 is providing support
• Current range: 0.7560 to 0.7678

Further levels in both directions:

• Below: 0.7560, 0.7472, 0.7385 and 0.7213
• Above: 0.7678, 0.7796 and 0.7913

OANDA’s Open Positions Ratio

The AUD/USD ratio has shown almost no change this week. Short positions have a majority (56%), indicative of trader bias towards AUD/USD losing ground.

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.