AUD/USD soaking-up positive trade sentiment, weighed by post NFP US dollar

On what is to be a bust week from the American calendar and quiet for Australia, AUD/USD is slightly offered in a relatively quiet session post-Nonfarm Payrolls Friday. AUD/USD climbed to 0.6857 before the US data, but then fell to 0.6824 and starts the week around 0.6835. AUD/USD is trading between 0.6828 and 0.6838 in the open this week. 

Firstly, the US Nonfarm Payrolls headline rose 266k in November, beating expectations by a 86k margin with October revised by +28k. Additionally, the unemployment rate fell from 3.6% to 3.5%, underemployment fell from 7.0% to 6.9%, although the participation fell from 63.3% to 63.2%, albeit within the upward trend. Hourly earnings rose 0.2%mth, 3.1% YoY. 

The US dollar bounced in line with US yields. US two-year treasury yields rose from 1.58% to 1.64% following the data, settling at 1.61%.  Meanwhile, analysts at Westpac explained that markets are pricing a near-zero chance of easing at the Fed’s 11 Dec meeting but a terminal rate of 1.28% (vs Fed’s mid-rate at 1.63% currently). "Markets are pricing a 65% chance of easing at the Feb RBA meeting, and a terminal rate of 0.38% (RBA cash rate currently at 0.75%)," the analysts explained.

US-China trade deal optimism circulating 

At the same time, the US-China trade deal optimism painted a positive background for the currency and regional markets. The state-run Xinhua News Agency said that China’s State Council began the process of exempting some soybeans and pork imported from the US from punitive tariffs, accompanying the news of confirmation from Beijing that indeed a 'phase-one' deal is "on track".

• China's trade surplus narrowed to $38.73 billion in November amid sharp drop in exports

In other developments, we had China’s November trade balance which cam out over the week which disappointed at CNY274bn (vs CNY300bn expected). 

AUD/USD levels

Valeria Bednarik, Chief Analyst at FXStreet explained that AUD/USD settled around the 50% retracement of its November slump, meeting sellers at the next Fibonacci resistance at 0.6865:

In the daily chart, the pair is developing below bearish 20 and 100 SMA, both converging around the 0.6800 level, while technical indicators hold within positive levels, although lacking strength upward. In the 4-hour chart, the pair offers a neutral-to-bullish stance, holding just above directionless 20 and 200 SMA, as technical indicators hover around their midlines, without offering directional clues. The pair would need to break above 0.6865 or below the 0.6800 figure to attract speculative interest.