AUD/USD jumps to 0.71 as greenback erases NFP-led gains after Powell comments
|- Powell said Fed will reassess strategy if downside risks increase.
- US Dollar Index pares gains, falls toward 96.
- December NFP growth beats estimates by a wide margin.
After turning negative on the day near 0.7020 following the strong employment data from the United States, the AUD/USD pair rose sharply in the last hour as the greenback came under heavy selling pressure on FOMC Chairman relatively dovish comments. The pair, which touched its highest level since December 21 at 0.7110, was last seen trading at 0.7095, adding 1.3% on a daily basis.
Earlier today, the U.S. Bureau of Labor Statistics reported that nonfarm payrolls increased by 312K in December and the annual wage inflation rose to 3.2% with both data surpassing analysts' estimates. With the initial market reaction, the US Dollar Index quickly retraced its daily fall and rose to 96.60. However, FOMC Chairman Powell comments forced the index, which is now down 0.1% on the day at 96.17, to reverse its course.
Speaking in a conference in Atlanta, Fed chief Powell said that they were ready to adjust the monetary policy if data suggested that downside risks were increasing and added that they could use all the tools as appropriate in a future crisis.
Additionally, the strong upsurge witnessed in major equity indexes in the U.S. help risk-sensitive currencies outperform their rivals in the last session of the first week of 2019.
Technical levels to consider
The pair could encounter the initial resistance at 0.7110 (daily high) ahead of 0.7150 (Dec. 20, 2018, high) and 0.7200 (Dec. 28 high). On the downside, supports are located at 0.7040 (7-DMA), 0.7000 (psychological level) and 0.6920 (Jan. 3 low).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.