The Australian dollar has posted considerable losses on Friday. Early in the North American session, the pair is trading just above the 0.76 level. There are no Australian or US releases on the schedule.
US numbers were positive on Thursday and continue to boost the US dollar. US unemployment claims dropped to 262 thousand, beating the forecast of 269 thousand. This marked a five-week low for the key indicator and points to a labor market that is not only robust, but is approaching full capacity. On the manufacturing front, the Philly Fed Manufacturing Index gained 2.0 points, rebounding nicely from a decline of -2.9 points in the previous release. This figure beat the estimate of 1.4 points.
In Australia, employment numbers sparkled in July. 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.
Any market players who were hoping for some clarity from the Federal Reserves minutes release are likely even more confused on the day after. The minutes, which provided the details of the July policy meeting, indicated that FOMC members are deeply 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%. 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. We’ll likely hear FOMC members continue to express their views ahead of the meeting of central bankers at Jackson Hole next week. The great rate debate needs to be resolved one way or another, as the Fed must set rates at its policy meeting next month. Policymakers will be fine-combing through key economic data, particularly employment and inflation numbers. The news remains bleak on the inflation 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%. As of now, a September hike is virtually off the table, while the Fed could go either way in December, with the odds of a December hike pegged at 50/50.
Friday (August 19)
- There are no Australian or US releases on the schedule
AUD/USD for Friday, August 19, 2016
AUD/USD August 19 at 9:00 EDT
Open: 0.7678 High: 0.7678 Low: 0.7598 Close: 0.7615
- AUD/USD posted considerable losses in the Asian and European sessions. The pair is unchanged early in North American trade
- 0.7701 has strengthened in resistance following losses from AUD/USD
- 0.7560 is providing 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 showing little movement on Friday. Currently, short positions have a small majority (52%), indicative of slight trader bias towards the pair reversing directions and moving upwards.