- AUD/USD is knocked for six on the strong NFP headline.
- The price is taking on 4-hour support, a break of that opens the risk of a deeper run below the countertrend line to test 0.68 the figure.
AUD, sensitive to risk tones in financial markets, has been battered by a doubling of market expectations in the Nonfarm Payrolls outcome. AUD/USD has fallen to 0.6882, dropping three pips below the August 2 lows. This move could be carving out a technical bearish breakout towards 0.6900, as illustrated below.
NFP doubles market expectations
Nonfarm Payrolls in the US rose by 528,000 in July, the data published by the US Bureau of Labor Statistics revealed on Friday. This reading followed June's increase of 398,000 (revised from 372,000) and came in better than the market expectation of 250,000. The Unemployment Rate edged lower to 3.5%.
Further details of the publication revealed that the annual wage inflation, as measured by the Average Hourly Earnings, remained unchanged at 5.2%, compared to analysts' estimate of 4.9%. Finally, the Labor Force Participation Rate declined to 62.1% from 62.2%.
Investors had been in anticipation of the report for further hints of how the US economy is faring considering a data-dependent Federal Reserve. The data now raises the prospects of a 75 bp hike from the Federal Reserve, which is not going to be favourable for risk sentiment or the Aussie that tends to track the performance of global stock markets. The odds of a 75 bps hike have leapt to 61% from 40% on the release.
US dollar tears higher on NFP
Meanwhile, ahead of the jobs data, the US dollar edged higher on Friday in a correction of some of the sharpest daily drop in more than two weeks, sliding 0.68% on Thursday, the largest fall since July 19. The US dollar index (DXY), which measures the greenback against a basket of currencies, was up 0.15% to 105.90 just ahead of the data release, a touch below the day's high of 106.00. While the data is being digested, the index is rallying to a high of 106.808, up over 1% on the day so far.
AUD/USD technical analysis
The price is taking on 4-hour support. There are prospects of a correction following this knee-jerk sell-off as the markets continue to position themselves around the data. There is scope for the price to correct to a higher area of volume to the upside near 0.6920/0.6940, but given the strength of the sentiment surrounding the Fed, a break below the lows printed today opens the risk of a deeper run below the countertrend line to test 0.68 the figure and a prior resistance structure.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD drops toward 1.0700 after US jobs report

EUR/USD came under renewed bearish pressure in the second half of the day on Friday and declined toward 1.0700. Stronger-than-expected Nonfarm Payrolls (NFP) data helps the US Dollar gather strength ahead of the weekend and forces the pair to stay on the back foot.
GBP/USD extends slide below 1.2450 amid a stronger USD

GBP/USD dropped further and hit fresh daily lows below 1.2450 amid a stronger US dollar. The Greenback remains firm following the release of the US May jobs report. Despite losing almost 100 pips on Friday, GBP/USD is still on track for a weekly gain.
Gold falls below $1,960 as US yields rebound after US jobs data

Gold price turned south and declined below $1,960 on Friday. After the data from the US revealed that Nonfarm Payrolls rose 339,000 in May, the benchmark 10-year US Treasury bond yield gained more than 2% and recovered toward 3.7%, weighing heavily on XAU/USD.
China crypto community picks Ethereum, Arbitrum and BNB Chain as top protocols

Ethereum, Arbitrum and BNB Chain protocols are top picks for the Chinese crypto community, data from a report shows, a possible bullish catalyst for tokens related to these protocols as Hong Kong opens the door of crypto to retail investors.
LULU stock adds 15% on big Wall Street beat

Lululemon Athletica did it again. In something that has become quite predictable, LULU stock sailed 14.9% higher in Friday’s premarket to $377.20 after the prized athleisure brand posted a nearly 15% earnings beat for the first quarter.