AUD/USD bounces off 21-day EMA ahead of Australia jobs report

  • AUD/USD stops post-FOMC declines ahead of Aussie employment data.
  • The Fed’s rate cut couldn’t please the USD bears as most policymakers were divided with dot plot expecting no more such announcements in 2019.
  • Risk tone remains on the recovery mode amid trade-positive headlines from the US, Japan and China.

Following the heaviest slump in more than a month, AUD/USD retraces some of the losses as it bounced off 21-day exponential moving average (EMA) while taking rounds to 0.6830 during early Thursday morning Asia.

The Aussie pair followed the market reaction to the US Federal Reserve’s subdued rate cut. The US Dollar (USD) surged across the board even after the Federal Open Market Committee (FOMC) matched market-wide expectations of a 0.25% rate cut. The reason being no such announcements are being expected for the rest of 2019, against one more rate cut anticipated by the markets, coupled with a lack of agreement about the decision among the policymakers. The quarterly economic forecasts were held mostly unchanged while Chairman Jerome Powell held his view that the present alteration is insurance against ongoing risks and not the beginning of a rate cut cycle.

With this, the US Treasury yields closed further towards the open of 1.81% while Wall Street managed to sum the Fed day up at a marginally high level.

Trade headlines seemed to have taken a halt ahead of the fresh executive-level US-China trade negotiations while political news remained surrounded to Saudi Arabia and Iran as the oil leader refrained to announcing any counteractions against Iran despite retrieving components pointing to Hassan Rouhani-led economy. It should also be noted that the US President Donald Trump ordered Treasury department to announced harsh sanctions against Iran but marked seems to care less for the same.

Investors will now focus on August month Employment Change and Unemployment Rate figures for fresh impulse while also taking clues from trade/political headlines and the US data for the rest of the day. The seasonally adjusted Employment Change and Unemployment Rate from Australia might disappoint the Aussie bulls as the forecast suggests a reduction in the formed to 10.0K from 41.1K earlier with an increase in the later to 5.3% versus 5.2% prior.

With the Reserve Bank of Australia (RBA) leaving doors open for further rate cuts if needed, disappointment from labor market numbers could lead to increased expectations of another rate alteration of 2019, which in turn signals the additional weakness of the AUD/USD pair.

Technical Analysis

Not only 21-day EMA level around 0.6825 but early-August tops close to 0.6820 also offers strong near-term downside support to the pair, a break of which opens the door for fresh declines towards 0.6800 and a month-start high near 0.6740. On the upside, 50-day EMA level of 0.6845 and 0.6895/0.6900 area, including monthly top and 100-day EMA, seems to restrict the pair’s immediate advances.

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