Australian dollar steady despite positive employment figures

AUD - Australian Dollar

The Australian Dollar was under renewed pressure yesterday despite an impressive employment print during Thursday morning. Opening at the 73 US cent handle, volatility was seen into the lead up to the unemployment print which saw the headline rate improve to 6.8% in August, comfortably beating initial expectations of 7.7%.

The Initial rally was seen in favour for the local currency from 0.7270, reaching an intraday high of 0.7310. Healthy employment gains were also seen, increasing by 110,000 jobs vs a -35,000 consensus, albeit led by part-jobs.

The tide quickly turned though losing all gains during the afternoon play as risk appetite waned. Flows back into the US dollar were seen and equities were also sold off as the ASX 200 closed 1.22% lower.

The Australian dollar recovered overnight and opens this morning at 0.7312. We expect support levels to hold on moves approaching 0.7260, while any upward push will likely meet resistance at 0.7350.

Key Movers

Equities were under pressure again dragging risk-based currencies with it. Tech stocks were the main catalyst for falls as the Nasdaq shed 1.48% overnight and the S&P 500 was down 0.85%. Investors sold on the lack of further QE plan updates by the Federal Reserve in the latest FOMC statement released on Thursday morning.

The US Dollar index was lower overnight (-0.2%) as a number of economic releases in the United States did little to move the needle in currency markets. Unemployment claims came in slightly below expectations as 860,000 American Citizens filed for first time claims and represents a modest shift lower. The Philly Fed Manufacturing Index grew at a slightly higher pace in September despite falling from 17.2 in August to 15 this month. The positive reading suggests that market conditions are slightly improving.

Across the Atlantic, the Bank of England also held their latest Monetary meeting, leaving interest rates at record lows as expected at 0.1%. The Great British Pound fell initially a full cent to 1.2865 as policy makers noted they would consider all options including negative interest rates in the future to combat uncertainty due to COVID-19. Eventual losses were stretched, and cable ended square at 1.2975.

On the docket today is the latest Retail Sales print in the United Kingdom overnight. Preliminary Consumer Sentiment and Inflation expectations are also due for release this evening in the United States.

Expected Ranges

AUD/USD: 0.7260 - 0.7350 ▲

GBP/AUD: 1.7500 - 1.7850 ▼

AUD/NZD: 1.0800 - 1.0880 ▼

AUD/EUR: 0.6140 - 0.6200 ▼

AUD/CAD: 0.9600 - 0.9670 ▼