AUD/USD: dropping below 10-hourly SMA at 0.7584 to print fresh lows

  • AUD/USD is the picture so bearish technically?
  • RBA firmly on hold, but GDP Q3 
  • AUD/USD dented further to the downside on broad-based dollar strength. 

AUD/USD is unable to get above the 100 hourly SMA at 0.7635 and the pair is moving into a deeper negative territory, (pressured by the bearish 21-SMA), below the 10-hourly SMA at 0.7584 while the greenback caught a bid on the inline ADP report as a solid prelude for NFP's Friday. Currently, AUD/USD is trading at 0.7569, down -0.53% on the day, having posted a daily high at 0.7636 and low at 0.7567.

AUD/USD fell from 0.7633 to 0.7571 on the Aussie GDP Q3 miss which opened speculation that the RBA might not afford to be so optimistic as it appeared to be at this week's meeting. While the RBA left rates on hold and statement seemed largely unchanged from the Nov statement, indicating that they remain neutral and will be on hold for foreseeable future, the market was looking for a more dovish rhetoric and instead there was optimism around growth in wages. 

  •  AU Q3 GDP q/q, 0.6%, 0.8% last,consensus 0.7%, 0.9% revised.
  • AU Q3 GDP y/y, 2.8%, 1.8% last, consensus 3.0%.

 Bill Evans, Chief Economist at Westpac explained in summary:

"This print will come as a major disappointment for the RBA. The big concern is whether households, the engine of the economy, accept that expectations of a lift in wages growth are unjustified and it becomes necessary to adjust spending to a lower income outlook. The big concern is whether households, the engine of the economy, except that expectations of a lift in wages growth are unjustified and it becomes necessary to adjust spending to a lower income outlook. Households, particularly those with high debt levels, would come to accept that ongoing falls in the savings rate cannot continue and spending must adjust. In this quarter the savings rate increased for the first time in five quarters signalling a need to adjust spending to a lower income trajectory. The current consumption growth of 2.1% makes the authorities’ forecasts of consumer spending growth of 2.75% in 2017/18 and 3.0% in 2018/19 appear optimistic."

US jobs outlook

In respect to the ADP report and nonfarm payrolls for Friday, US: Private sector employment increased by 190,000 jobs in November leaving the NFP's report on Friday in good stead. For Friday, the median expectation in the Bloomberg survey is that the US economy created net new 200k jobs in November. Last year, the non-farm payrolls rose an average of 187k a month.

"Barring a significant surprise, the focus is on average hourly earnings more than the number of jobs created or the headline-grabbing unemployment rate,"

explained analysts at Brown Brothers Harriman. 

AUD/USD levels

"We continue to favour a deeper corrective rebound towards the 200-day ma at 0.7693 and the 55-day ma at 0.7722," the analyst at Commerzbank explained. "The market reversed recently just ahead of strong support – namely the 2016-2017 uptrend line and double Fibonacci retracement at 0.7500- 0.7475 (50% retracement of the move up from the 2016 low AND the 78.6% retracement of the move seen from May 2017). The recent intermediate high on 2 nd November at 0.7729 will need to be overcome to alleviate immediate downside pressure to a trigger a retracement to 0.7828/.7886," the analysts added further.

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