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AUD/USD losses traction and plummets to two-week lows around 0.6930s after solid US data

  • AUD/USD falls sharply by more than 100 pips on US economic data.
  • The US Nonfarm Payrolls report almost tripled the market’s expectations for job creation.
  • US ISM Non-Manufacturing PMI is back at expansionary territory.

AUD/USD collapsed after US economic data on Friday showed that the labor market remains tight, and it would keep the US Federal Reserve under pressure to bring down inflation to the 2% target. That, alongside the US Dollar paring Wedneadys losses on Thursday, are the reasons for today’s price action. At the time of writing, the AUD/USD exchanges hands at around 0.6970s.

US jobs data surprised investors, as further Fed action is expected

Wall Street opened the last trading session of the week with losses. The US Department of Labor (DoL) revealed January data that surprised investors, with Nonfarm Payrolls smashing expectations after the economy created 517K jobs in the month, exceeding estimates for the creation of just 185K jobs. Consequently, the Unemployment Rate fell to 3.4% from 3.5%, while December’s figures were revised upward.

Average Hourly Earnings, sought by the US Federal Reserve as a measure of wages inflation, linked to last week’s Employment Cost Index (ECI), came in at 0.3% MoM, in line with forecasts but lower than December’s report.

All the same, the AUD/USD extended its losses, but not without putting up a fight around the 0.7000 psychological barrier. Once it gave way, the AUD/USD dropped below the 20-day Exponential Moving Average (EMA) at 0.6992 ad so far is eyeing the confluence of the January 19 daily low and the 50-day EMA at 0.6871.

In the bond market, US Treasury bond yields, mainly the 10-year benchmark note rate, climbed 14.5 bps to 3.54% after falling towards a monthly low of 3.334% on Thursday.

Of late, the US economic calendar revealed that S&P Global PMIs came slightly above estimates. Meanwhile, the ISM Non-Manufacturing PMI Index, which reports the behavior of the services economy, climbed back above in expansionary territory, rising to 55.2 from 50.4 estimates and way above December’s 49.2.

AUD/USD Key Technical Levels

AUD/USD

Overview
Today last price0.696
Today Daily Change-0.0124
Today Daily Change %-1.75
Today daily open0.7084
 
Trends
Daily SMA200.7001
Daily SMA500.6848
Daily SMA1000.6668
Daily SMA2000.6811
 
Levels
Previous Daily High0.7158
Previous Daily Low0.7069
Previous Weekly High0.7143
Previous Weekly Low0.696
Previous Monthly High0.7143
Previous Monthly Low0.6688
Daily Fibonacci 38.2%0.7103
Daily Fibonacci 61.8%0.7124
Daily Pivot Point S10.7049
Daily Pivot Point S20.7014
Daily Pivot Point S30.696
Daily Pivot Point R10.7138
Daily Pivot Point R20.7192
Daily Pivot Point R30.7227

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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