Aussie higher ahead of confidence data

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

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.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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