The Australian dollar has started the trading week in positive territory. Currently, AUD/USD is trading at 0.7706, up 0.37% on the day.
Business and consumer confidence next
Australian releases key business and confidence numbers on Tuesday. NAB Business Confidence (00:30 GMT) slowed to 4 in December, down sharply from 12 beforehand. Westpac Consumer Sentiment (23:30 GMT) also weakened in December, with a reading of -4.5%. This marked the first decline in five months. We now await the January numbers.
Last week wrapped up with a disappointing US nonfarm payrolls report. NFP posted an anemic gain of 49 thousand, missing the estimate of 85 thousand. True, this could be considered a rebound from the previous reading of -140 thousand, but investors were unimpressed and sent the US dollar broadly lower to end the week. The Australian dollar soared on Friday, gaining 1.02 per cent, its best one-day performance in a year. Investors shrugged off a weak Retail Sales, which came in at -4.1%. This reading was upwardly revised from the -4.2% decline in the Preliminary Retail Sales release.
Overshadowed by the weak Nonfarm Payrolls report was a sharp drop in the unemployment rate, which fell from 6.7% to 6.3%. The unemployment rate is currently at its lowest level since April. The unemployment rate, which hit a peak of 11.1% in June, has been steadily falling. This is good news, of course, but it has not translated into workers returning to the workforce – the participation rate in the workforce has hovered close to 61.4% for the past seven months. Wage growth slowed to 0.3%, down sharply from 0.8% a month earlier. At the end of the day, the US labor market is weak, a reflection of the slow recovery that is taking place, as the country struggles with the resurgence in Covid-19.
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AUD/USD Technical
- 0.7715 is under pressure in resistance. The next resistance line is at 0.7755
- There is support at 0.7602, followed by support at 0.7525
- AUD/USD has pulled away from the 50-day moving average (MA), which is situated at 0.7615
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Kenny Fisher
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