The Australian dollar finds itself in negative territory on Thursday. In the European session, AUD/USD is trading at 0.7724, down 0.35% on the day. The pair lost ground on Wednesday before recovering and closing the day unchanged.
Australian numbers were positive on Thursday. The second reading for April Retail Sales came in at 1.1%, confirming the initial reading. The country’s trade surplus widened to AUD8.20 billion in April, up sharply from AUD5.8 billion. As expected, the trade position showed improvement as exports increased while imports were slightly lower. Exports rose by 3.0%, and as the economy reopens, domestic demand should expand.
The economic recovery continues to deepen and this was reflected in Australian GDP for the first quarter. The economy rose 1.8% q/q, down from 3.2% in Q4. Still, this beat the consensus of 1.5%. The level of economic activity currently is 0.8% above the fourth quarter 2019 pre-pandemic level. On an annual basis, GDP climbed 1.1%, rebounding from the -1.0% read in Q4.
The highlight of the week is the US nonfarm payroll release for May on Friday (12:30 GMT). The market is projecting a strong release, with a consensus of 664 thousand. If the upcoming release is within expectations, it would indicate a significant acceleration from the April reading of 266 thousand. The April release was a huge disappointment, as the forecast stood at 966 thousand. Investors can be expected to be cautious ahead of the release. If the NFP read is within expectations, we could see a breakout in the forex markets on Friday.
Investors will also be keeping an eye on wage growth, which could rain on the NFP party. Average Hourly Earnings is projected to slow to 0.2% in May, after a sharp gain of 0.7% previously.
- AUD/USD faces resistance at 0.7777. Above, there is resistance at 0.7846
- On the downside, there are support levels at 0.7658 and 0.7608
For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-event
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