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AUD/USD hits monthly low ahead of Australia employment report


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Australian Dollar Talking Points

AUD/USD fell back from a new monthly high (0.6916) as an update to US Consumer Price Index (CPI) Another 75bp raises expectations for a Federal Reserve rate hike, but data print coming from Australia could offset the recent drop in the exchange rate as job growth is expected to recover in August.

AUD/USD hits monthly low ahead of Australia employment report

AUD/USD breaks the chain of highs and lows from last week on the strength of the US dollar, and the exchange rate may fall further in the coming days, as the 50-day SMA (0.6892) fails to close above Attempt .

As a result, the AUD/USD can track a negative slope in the moving average: CME Fedwatch Tool The 75bp rate now on September 21 shows a 100% chance for a hike, but an update to Australia’s employment report could push the exchange rate up ahead of the FOMC meeting as the economy is projected to add 35.0K jobs in August.

Image of the DailyFX Economic Calendar for Australia

A correction in the labor market could generate a bullish reaction in the AUD/USD as it widens the Reserve Bank of Australia (RBA)’s scope to implement a restrictive policy, but another unexpected contraction in job growth is due to the central bank as governor to shift gears. Philip Lowe And the company plans to “maintain the economy equitably.”

In turn, developments outside Australia could affect the AUD/USD in the coming days as the RBA “expects interest rates to rise further in the coming months”, but a further fall in the exchange rate could reflect a tilt in retail sentiment. can promote. Behavior seen earlier this year.

Image of IG client sentiment for AUD/USD rate

IG Client Sentiment Report Shows that 73.24% of traders are currently net-long AUD/USD, with a ratio of traders long standing short to 2.74 to 1.

The number of net-long traders is 12.77% higher than yesterday and 12.31% lower than last week, while the number of net-short traders is 30.63% lower than yesterday and 8.54% lower than last week. A decline in net-long interest did little to dampen crowding behavior as 70.54% of traders were net-long AUD/USD last week, while net-short positions declined as the exchange rate hit a new monthly high. managed to reach. (0.6916) earlier this week.

Additionally, a rebound in Australia’s employment could halt the recent decline in the AUD/USD as it encourages the RBA to further normalize monetary policy, but fails to close above the 50-day SMA (0.6892) Efforts can be tested. Monthly low (0.6699) as it breaks the chain of highs and lows from last week.

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AUD/USD Rate Daily Chart

Image of AUD/USD rate daily chart

Source: trading view

  • AUD/USD appears to have reversed further from the 0.6940 (78.6% expansion) area as it trades below the 50-day SMA (0.6892), from 0.6760 (50% retracement) to the 0.6770 (100% expansion) area. with below. Increasing the scope for testing the monthly low level (0.6699).
  • Failure to defend the yearly low (0.6681) could push AUD/USD to the June 2020 low (0.6648), with the next area of ​​interest from around 0.6460 (61.8% retracement) to 0.6520 (38.2% expansion) .
  • However, a lack of momentum to test the monthly low (0.6699) could keep AUD/USD within a defined range, bringing the 0.6940 (78.6% expansion) to 0.6760 (50% retracement) to 0.6770 (100% expansion) zone. With a step for. area back on the radar.

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— Written by David Song, Currency Strategist

Follow me on Twitter @DavidJSong



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