AUD/USD Forecast: Rebound has room to run, attention turns to Australian jobs data
AUD/USD Current Price: 0.6671
- Employment data from Australia, due on Thursday, will be crucial for the Aussie.
- Improvement in market sentiment triggers a rebound in AUD/USD.
- The pair was rejected from under 0.6635/40 and is pointing towards more gains before key data.
The AUD/USD turned positive on Wednesday after hitting a two-week low at 0.6627, rising above 0.6670. The move higher was boosted by an improvement in market sentiment, which weighed on the US Dollar. Attention now turns to economic data.
Data released on Wednesday showed that the Wage Price Index in Australia rose 0.8% quarterly during the first quarter, slightly below the market consensus of 0.9%. The annual rate rose to 3.7%, the highest level since September 2012. Although labor costs are a relevant input for the Reserve Bank of Australia (RBA), the Q1 data alone is not enough to push the decision toward a rate hike.
More important for the RBA will be the employment report early on Thursday. The employment change is expected to be positive, around 25,000 in April following March's positive surprise of 53,000. The Unemployment Rate is expected to remain at 3.5%, near the record low of 3.4%. Job market figures will shape expectations about the next move from the RBA, which meets on June 6. The tightness in the labor market is expected to ease only gradually, so numbers in line with expectations would keep pressure on the RBA to maintain a hawkish tone.
The Australian employment report will be released during Asian hours and will be relevant for the AUD/USD. Also, how market sentiment develops will be important. The better tone in Wall Street on Wednesday boosted the pair far from the weekly lows. At the same time, the US Dollar still shows signs of strength that could limit the upside. However, if the Dollar loses momentum, coupled with a positive employment report, it could set the stage for a rally.
AUD/USD short-term technical outlook
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On the daily chart, the AUD/USD still holds below the 20-SMA and is facing some bearish pressure. However, as long as it stays above 0.6635/40, losses seem limited. A break lower would open the doors for a test of 0.6600, and below that comes the March low at 0.6560/65. On the upside, the 0.6800 is the crucial resistance to break.
Support levels: 0.6625 0.6600 0.6565
Resistance levels: 0.6680 0.6710 0.6745
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Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
