AUD/USD approaches 0.6900 with bears in control ahead of Australia Employment data

• AUD/USD remains pressured around weekly low after breaking one-month-old bullish channel to the south.
• Sour sentiment, China-linked fears and downbeat Aussie Wage Price Index have already put a floor for bears.
• Fed Minutes failed to impress USD bears amid recession woes.
• Australia employment numbers for July, and second-tier US data will be important for fresh impulse.

After falling to the weekly low, AUD/USD holds lower grounds near 0.6930, as traders await Australia’s monthly employment data during Thursday’s Asian session. In doing so, the Aussie pair portrays the market’s risk-off mood and justifies the previous day’s downbeat wage numbers.

Market sentiment soured after the US 10-year Treasury yields rose the most in a week while refreshing the monthly high near 2.90%. In doing so, the benchmark bond coupons ignored downbeat Federal Open Market Committee (FOMC) meeting Minutes, while also ignoring risk-positive news from China Securities.

The Fed Minutes stated that the policymakers strongly supported the 75 bps rate increase in August while seeing a slowing pace of hikes at some point. The Minutes also signaled that Fed officials saw the hazard the Fed could tighten more than necessary.

On the other hand, “China may issue 1.5trln yuan in additional debt as part of an investment push,” mentioned china securities news.

It should be noted that the softer-than-expected Aussie Wage Price Index for the second quarter (Q2) also exerted downside pressure on the AUD/USD prices the previous day. That said, Aussie wages grew 0.7% QoQ in Q2 to mark the faster pace of growth since September 2014. However, the figures remain dismal compared to the inflation data and the Reserve Bank of Australia’s (RBA) economic fears.

In the case of the US, Retail Sales flashed 0.0% growth during July, versus 0.1% expected and a downwardly revised 0.8% prior. However, the Retail Sales Control Group figures rose to 0.8% compared to 0.6% market consensus and 0.7% prior (revised from 0.8%).

Following the mixed data and Fed Minutes, Federal Reserve Governor Michelle Bowman mentioned, “High inflation and strong employment will likely create some pressure on labor and employment.”

Moving on, AUD/USD traders should pay close attention to the Aussie jobs report for July amid recent challenges for the Reserve Bank of Australia’s (RBA) further rate hikes. That said, the headline Employment Change is likely to register a 25K figure versus 88.4K prior while the Unemployment Rate is expected to remain unchanged at 3.5%. The weekly prints of the US Initial Jobless Claims and Philadelphia Fed Manufacturing Survey for August could entertain the pair traders.

Also read: Australian Employment Preview: No surprises on solid job creation

Technical analysis

A clear downside break of the one-month-old bullish channel, directs AUD/USD prices towards the yearly low of 0.6678. However, 50-DMA and May’s low, respectively around 0.6900 and 0.6825, could act as buffers to the south. Meanwhile, recovery remains elusive until the quote stays below the 200-DMA level around 0.7120.