Asia Pacific Market Open – S&P 500, US Dollar, Australia Jobs Report, AUD/USD
- The high-yielding US Dollar depreciated as the S&P 500 saw knee-jerk volatility
- US-China trade talk hopes bolstered sentiment, Fed’s Brainard boosts bond yields
- Can Australia jobs report add fuel to AUD/USD’s break above near-term resistance?
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The US Dollar was under pressure as the relatively high-yielding currency sunk with S&P 500 futures heading into Wall Street market open. Worse-than-expected US PPI data showed wholesale inflation losing momentum which boded ill for the greenback. Then, market mood continued to deteriorate after opening bell which amplified US Dollar losses.
From there and until the end of the trading session, the markets were hit with knee-jerk volatility. Sentiment briefly improved after reports crossed the wires that the US is said to propose new rounds of trade talks with China. The MSCI Emerging Markets ETF rose for a second day. In addition, official DOE inventory data showed weekly crude oil stockpiles contracting by more than expected, boosting energy shares.
US government bond yields then rose on rather hawkish commentary from Lael Brainard, a member of the Fed’s Board of Governors. She noted that the central bank may have to raise rates above long-run estimates. Despite the performance in treasuries, the US Dollar remained suppressed. This allowed other relatively high-yielding fiat alternatives to capitalize on its weakness such as the Australian and New Zealand Dollars.
In the end, US benchmark stock indexes were little changed which could pave the way for a choppy Asia Pacific trading session. The Australian Dollar faces August’s local jobs report. But given that this data will likely have limited implications for RBA monetary policy bets, a lasting response from the Aussie could be unlikely as it focuses on trade war fears and emerging market performance.
Join our Australian Jobs Report Webinar for live coverage of the event and the Australian Dollar reaction!
AUD/USD Technical Analysis – Near-Term Resistance Broken
The Australian Dollar broke above a near-term descending resistance line after failing to deliver additional downside progress on the break under range support. We are now wedged in between the December/May 2016 lows and the 38.2% Fibonacci extension. A relatively upbeat jobs report may see near-term resistance broken which would pave the way for more AUD/USD gains.
AUD/USD Daily Chart
US Trading Session
Asia Pacific Trading Session
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--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
