AUD/USD trims weekly losses, hover around 0.7315 on dismal UoM Consumer Sentiment

AUD/USD recovers some of its weekly losses, advances for the first time in four days, edges up 0.32%, trading at 0.7312 during the New York session at the time of writing. The Australian dollar took three days of consecutive losses, losing almost 2%, but in the European session found some demand, bouncing from daily lows around 0.7270s pushing higher, despite broad US dollar strength.

The US Dollar Index, which tracks the greenback’s performance against a basket of six peers, advances 0.06%, sitting at 95.20, underpinned by higher US T-bond yields, with the 10-year benchmark note moving higher one basis point, currently at 1.561%.

The AUD/USD seems to be moving in US dollar profit-taking. The Australian 10-year bond yield drops one basis point at 1.795%, contrary to the abovementioned US 10-year Treasury.

Australia Unemployment Rate jumped to 5.2% on a dismal jobs report

Recapping the week, the Australian economic docket witnessed the Jobs report, severely missing the market’s expectations.  The Employment Change for October dropped 46.3K when the market expected 50K new jobs added to the economy. Consequently, the Unemployment Rate for the same month jumped to 5.2%, from 4.6% in the September reading. After those figures, the Reserve Bank of Australia (RBA) cemented its dovishness stance, as witnessed by Governor Philip Lowe, who remarked that the central bank would be patient concerning rising rates in the near term.

US inflation above 6%, for the first time in three decades

On the US front, the so-called Wholesale inflation, the Producer Price Index (PPI) excluding food and energy rose by 6.8%, in line with expectations, was ignored by the market. The highlight of the week was US inflation from the consumer perspective. The headline reading increased by 6.2%, higher than the 5.8% foreseen by analysts, reaching the highest reading since 1990. 

That would put the Federal Reserve under pressure, as their view of “transitory” inflation seems to last longer than expected. It is worth noting that the US central bank announced at its last monetary policy meeting that they would begin the bond tapering in mid-November.

Further, on Friday, the University of Michigan Consumer Sentiment Index for November edged lower to 66.8, lower than the 71.7 in October, marking the lowest reading since November 2011. 

According to the report, "consumer sentiment fell in early November to its lowest level in a decade due to an escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation," said Richard Curtin, Surveys of Consumers chief economist.