AUD/USD rises from 8-month lows after NFP
- Downbeat unemployment data helped Aussie to rise from 8-month lows.
- The halt in Dollar rally could be temporary and may weigh on the Australian Dollar again.
- RBA meeting next week can provide impetus to the market
The Australian Dollar saw six consecutive days of losing streaks. The AUD/USD pair fell below the 0.7500 psychological mark and tested 21 December lows of 0.7445 area. The downtrend stemmed from Fed Chair Powel’s comments last week that triggered a rally in Greenback across the board. However, a nonfarm payroll report for the US came out and turned the upside-down of the market.
Post-NFP analysis: Aussie gains traction.
Fixed-income traders found disappointed in the nonfarm payroll figures as the unemployment rate could not tick higher. The sharp decline in US Treasury bond yields remained evident after the data release. Moreover, risk assets like the Australian Dollar took benefit from the improved risk sentiment.
The employers were able to add 850k new jobs in the US economy, which has been the strongest figure since August 2020. The momentum has clearly picked over the past two months.
Despite a sharp rise in payrolls, the unemployment rate rose to 5.9%. The rise emerged from household measures of employment that dropped to 18k. Thus, although the labor supply increased, the reduction in unemployment will take more time.
The AUD/USD pair picked up bids from 8-month lows amid little discouraging figures of unemployment. The upbeat jobs addition could not help the Greenback rally to continue. The pair has pared off some of the weekly losses. However, the Aussie will still close the week in red and will remain vulnerable to further losses.
We doubt that this halt in Dollar bulls could only be a retracement in the US Dollar that may trigger a “buy at bottom” call later next week. As 850k jobs have been added to the economy, the trend seems encouraging. It can take time but the US economy will reach a pre-pandemic level.
RBA meeting next week
The RBA meeting next week can also be decisive for the pair to find the directional bias. It should be noted here that on Monday, July 5, American trading floors will be closed. The States will continue to celebrate the public holiday (Independence Day). Literally the next day, during the Asian session on Tuesday, the RBA will announce its verdict on the prospects for monetary policy. For AUD/USD traders, this means that the pair may show increased volatility in the near future.
AUD/USD technical outlook: Key level for bulls
Despite the recent surge of more than 50 pips, the price is still capped by the 0.7500 mark and 20-SMA on the 4-hour chart. The 50 and 200 periods SMAs are also pointing downwards. However, the volume is encouraging and may help bulls to gain further traction in the next trading session.
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