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Australian Dollar Forecast: Jobs Report Fails to Inspire AUD/USD

Australian Dollar Forecast: Jobs Report Fails to Inspire AUD/USD

Thomas Westwater, Analyst

Australian Dollar, AUD/USD, Covid, Australian Jobs Report – Talking Points

  • Upbeat Wall Street session may boost Asia-Pacific sentiment
  • Australian employment report for December sees 50k jobs added, as expected
  • AUD/USD marginally lower following jobs report, Triangle formation eyed

The New York trading session saw major stock indexes climb to new record highs on Wednesday, bolstered by upbeat earnings. The Nasdaq Composite rose by an impressive 1.97%, followed by the S&P 500, Dow Jones Industrial Average, and Russell 2000, up 1.39%, 0.83%, and 0.44%, respectively. At the same time, the US Dollar traded mostly sideways along with the 10-year Treasury yield.

Wall Street’s risk-on tone reflects an improved economic outlook among investors. US Covid cases have been trending lower, though the amount of new daily cases and the number of hospitalizations remains extremely high at 123,820 currently, according to The Covid Tracking Project. The Biden administration plans on having 100 million Covid vaccine doses administered within the next 100 days, an aggressive but doable goal according to health experts.

Markets are also pricing in greater Covid relief aid following the political shift that has put Democrats in control of Congress, albeit only by a small margin. Still, a $1.9 trillion price tag is the current goal for President Biden, who was sworn in on Wednesday and is already making swift changes in policy. The amount is sure to face pushback from Republicans on Capitol Hill, but even a slightly smaller aid package will likely please markets.

Nasdaq, Dow Jones, US 10-Year Treasury Yield

Australian Dollar Forecast: Jobs Report Fails to Inspire AUD/USD

Chart created with TradingView

Thursday’s Asia-Pacific Outlook

Asia-Pacific markets will likely see an upbeat trading session following the cheery Wall Street session. China’s Shanghai Composite gained 0.47% on Wednesday. Other major indexes also rose with the Hang Seng Index (HSI) finishing 1.08% higher, just below the 30,000 level after Alibaba Group Holding helped elevate the index to its highest level since mid-2019.

A Bank of Japan interest rate decision will cross the wires during Thursday’s session, according to the DailyFX Economic Calendar. Analysts largely expect the BoJ to hold rates steady at -0.1%, although changes to the central bank’s economic forecasts may be on offer. Still, outside of any big surprises markets will likely focus on the carried-over sentiment from Wall Street and Australia's jobs report.

Australian Jobs Report

AUD/USD gave a mildly negative reaction to the December jobs report. The employment change crossed the wires at 50k, in line with expectations. While the unemployment rate dropped to 6.6% from 6.8%, a sizeable portion of the jobs added was in part-time employment at 14.3k versus 35.7k full-time jobs. The participation rate also improved, rising to 66.2% from 66.1%.

Australian December Employment Report

AU Jobs Data chart

Source: BBG

Australian Dollar Technical Outlook:

AUD/USD has climbed roughly 0.70% so far this week, as the US Dollar weakened. Currently, prices are trading within a recently formed Symmetrical Triangle. The pattern’s upper bound may provide resistance, but a breakout will bring the recent multi-year high at 0.7820 into focus. Overall, prices appear skewed to the upside, but consolidation may continue in the interim.

AUD/USD Daily Chart

AUD/USD chart

Chart created with TradingView

AUD/USD TRADING RESOURCES

--- Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwateron Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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