The Australian dollar is down considerably in the Wednesday session. Currently, the pair is trading at 0.7703, down 0.58% on the day.
Australian employment expected to tick higher
Investors are expecting a modestly positive reading for the February employment data (Thursday, 00:30 GMT). The economy is projected to have created 30.5 thousand new jobs, little changed from the gain of 29.1 thousand last month. Job created has slowed dramatically since the sparkling gain of 278 thousand in October, but remains in positive territory. The unemployment rate is expected to drop from 6.4% to 6.3%, which would mark a fourth successive drop. Unless these releases are way off the estimates, the Australian dollar’s response to these numbers should be muted.
Market eyes key FOMC meeting
All eyes are on the FOMC meeting later this evening (18:00 GMT). The policy announcement is the most important event risk of the week and should be treated as a market-mover. FOMC members are meeting for the first time since inflation expectations have risen, sending US yields sharply higher. Fed Chair Powell hasn’t expressed any concerns about the recent rise in US Treasury yields or higher inflation, but will he convey the same message tonight? If Powell states that he has concerns about higher yields, as we saw with the ECB, then yields could sink and drag the US dollar lower. Powell is expected to reiterate that the Fed continues to have a dovish stance, but at the same time growth and inflation forecasts are expected to be revised upwards. The chairman is walking a fine line, as he will need to reassure the market that the economy is improving while dampening concerns about the economy overheating.
AUD faces resistance at 0.7832, followed by resistance at 0.7906. On the downside, 0.7652 has weakened and could face pressure if the AUD loses more ground. The next support level is at 0.7546
For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/
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