Aussie extends gains after jobs report

The Australian dollar continues to post gains this week. AUD/USD has punched above the 0.74 line, and is currently trading at 0.7413, up 0.48% on the day. The Aussie has not had a losing daily session this week, and the currency is up 1.48% on the week.

Australian jobs within expectations

The Australian employment report for September was nothing to write home about, with a sharp loss in jobs. The number of employed people fell by 138 thousand, following a decline of 146 thousand. The unemployment rate showed an uptick to 4.6% from 4.5% in August. Investors didn’t punish the Australian dollar, however, as the numbers were within expectations.

The US dollar has retreated against the majors on Thursday, with the exception of the struggling Japanese yen. Risk sentiment has risen, fuelling equities as well as risk currencies like the Australian dollar, which is currently at a 5-week high against the greenback. The US dollar index has dropped 0.34% on the day, to 93.76. This is a result of the strong US 30-year bond auction overnight, which sent Treasury yields lower. If the index has a daily close below 93.50, that could change the bullish sentiment towards the US dollar.

The Australian dollar is also sensitive to the key events in China, which posted mixed inflation numbers for September. CPI dipped to 0.7% (Y0Y), down from 0.8% beforehand. MoM CPI fell to 0.1%, missing the forecast of 0.3%. However, PPI jumped 10.7%, the highest level ever recorded. The Aussie was able to shrug off the mixed data from Australia’s largest trading partner.

In the US, the FOMC minutes signalled a Fed tapering in November or December. The minutes indicated that the Fed would scale back its bond purchases of USD 120 billion/month gradually, until the programme was completely wound up in July. As for a rate hike, earlier in the week, the markets brought forward the pricing of a rate hike from December 2022 to September 2022.

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AUD/USD Technical

• AUD/USD broke through resistance at 0.7356 on Wednesday and is testing resistance at 0.7403. Above, we find resistance at 0.7468.
• The pair has support at 0.7244.  Below, there is support at 0.7179

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