AUD/USD Starts the Week Positively Amidst Soft US ...
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AUD/USD Starts the Week Positively Amidst Soft US Employment Data
The AUD/USD pair commenced the new week on a positive note, gaining traction and hovering near the 0.6575 mark during the Asian session on Monday. The Australian Dollar's upward momentum was supported by disappointing US employment data released on Friday.
The US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls in the US rose by a meager 187,000 in July, falling short of expectations by 200,000. Additionally, the figures for June were revised downward to 185,000, marking the lowest reading since December 2020. Meanwhile, the Unemployment Rate experienced a slight decline, going from 3.6% to 3.5%. Furthermore, annual wage inflation, as measured by changes in Average Hourly Earnings, came in at 4.4%, surpassing the market estimation of 4.2%. However, the Labour Force Participation remained unchanged at 62.6%. These lackluster employment figures indicated a sluggish labor market in the US, potentially leading the Federal Reserve (Fed) to consider lowering interest rates to limit the upside for the USD.
On the Australian front, Reserve Bank of Australia (RBA) Governor Phillip Lowe stated that maintaining the current interest rates gives the RBA more time to assess the impact of previous interest rate hikes and the overall economic outlook. However, he also hinted that further monetary policy tightening might be necessary to ensure inflation returns to the target range within a reasonable timeframe. This decision would depend on incoming data and the evolving risk assessment.
As for data in Australia, the Australian Bureau of Statistics (ABS) revealed that the Australian Trade Balance was A$11,321M, slightly lower than the A11.791M recorded in May. The dip in exports, particularly in coal, mineral fuels, and metals shipments, was attributed to a decline in commodity demand in China. However, the decrease in exports was partially offset by a 4% decline in imports in May. Meanwhile, Retail Sales QoQ came in at -0.5% from the previous -0.6%.
In a significant development, the Chinese Ministry of Commerce announced that China would lift its anti-dumping and anti-subsidy tariffs on Australian barley imports, effective August 5. This move further bolstered the Australian Dollar against its rivals.
Moreover, China's Caixin Services PMI climbed to 54.1 in July from 53.9 in the previous period, exceeding market expectations of 52.5. The optimistic Chinese economic figure also added to the strength of the China-proxy Australian Dollar (AUD).
With the absence of economic data releases from Australia on the bank holiday, market participants will closely analyze the data from Friday. However, attention will shift to the Chinese Consumer Price Index (CPI) YoY on Wednesday, as well as the US Consumer Price Index (CPI) and the Produce Price Index (PPI) for July later in the week. Market players anticipate a 0.2% monthly increase in the US CPI, and these data points will be crucial in determining the future direction of the AUD/USD pair.
TurnAround Point: 0.66100
Our preference
Long positions Below 0.66100 with targets at 0.6545 & 0.6530 in extension.
The AUD/USD pair commenced the new week on a positive note, gaining traction and hovering near the 0.6575 mark during the Asian session on Monday. The Australian Dollar's upward momentum was supported by disappointing US employment data released on Friday.
The US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls in the US rose by a meager 187,000 in July, falling short of expectations by 200,000. Additionally, the figures for June were revised downward to 185,000, marking the lowest reading since December 2020. Meanwhile, the Unemployment Rate experienced a slight decline, going from 3.6% to 3.5%. Furthermore, annual wage inflation, as measured by changes in Average Hourly Earnings, came in at 4.4%, surpassing the market estimation of 4.2%. However, the Labour Force Participation remained unchanged at 62.6%. These lackluster employment figures indicated a sluggish labor market in the US, potentially leading the Federal Reserve (Fed) to consider lowering interest rates to limit the upside for the USD.
On the Australian front, Reserve Bank of Australia (RBA) Governor Phillip Lowe stated that maintaining the current interest rates gives the RBA more time to assess the impact of previous interest rate hikes and the overall economic outlook. However, he also hinted that further monetary policy tightening might be necessary to ensure inflation returns to the target range within a reasonable timeframe. This decision would depend on incoming data and the evolving risk assessment.
As for data in Australia, the Australian Bureau of Statistics (ABS) revealed that the Australian Trade Balance was A$11,321M, slightly lower than the A11.791M recorded in May. The dip in exports, particularly in coal, mineral fuels, and metals shipments, was attributed to a decline in commodity demand in China. However, the decrease in exports was partially offset by a 4% decline in imports in May. Meanwhile, Retail Sales QoQ came in at -0.5% from the previous -0.6%.
In a significant development, the Chinese Ministry of Commerce announced that China would lift its anti-dumping and anti-subsidy tariffs on Australian barley imports, effective August 5. This move further bolstered the Australian Dollar against its rivals.
Moreover, China's Caixin Services PMI climbed to 54.1 in July from 53.9 in the previous period, exceeding market expectations of 52.5. The optimistic Chinese economic figure also added to the strength of the China-proxy Australian Dollar (AUD).
With the absence of economic data releases from Australia on the bank holiday, market participants will closely analyze the data from Friday. However, attention will shift to the Chinese Consumer Price Index (CPI) YoY on Wednesday, as well as the US Consumer Price Index (CPI) and the Produce Price Index (PPI) for July later in the week. Market players anticipate a 0.2% monthly increase in the US CPI, and these data points will be crucial in determining the future direction of the AUD/USD pair.
TurnAround Point: 0.66100
Our preference
Long positions Below 0.66100 with targets at 0.6545 & 0.6530 in extension.
Trade fechado: objetivo atingido
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