AUD/USD Looks Past Jobs Data, Risk Trends Point to Losses Ahead

TALKING POINTS – AUD/USD, UNEMPLOYMENT RATE, FED, EQUITIES

• Australian Dollar rose against greenback on mixed jobs data, but lacks follow-through
• AUD/USD prices resume 2018 downtrend, with more bearish momentum perhaps ahead
• Aussie looks to risk aversion,November’s US durable goods orders and consumption data

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The Australian Dollar was cautiously higher against its US counterpart after local employment data crossed the wires early into Thursday’s Asia Pacific trading session. November’s unemployment rate came in at 5.1%, an increase from both the expected and previous 5.0%. TAustralia’s economy added 37.0k jobs during last month, up from the 20.0k forecasted and 28.7k prior. Meanwhile, full-time employment declined by 6.4k jobs, compared to October’s 39.5k gain.

AUD/USD Chart (5-minute)

Chart prepared in TradingView

The slight uptick in prices is may not continue, as AUD/USD has maintained its downward trend under the descending February 2018 trend line. An Inverse Head and Shoulders formation occurred on the currency pair’s rally on the news of a temporary US-China trade truce, but negative RSI divergence has been confirmed with recent losses as expected. A break above the 0.7140-0.7192 support-turned-resistance levels could indicate an upswing in prices but interest rate differentials. In addition, declining Australian growth suggests that the Aussie can add to losses.

AUD/USD Chart (Daily)

Chart prepared in TradingView

Looking ahead, the sentiment-linked unit may extend losses following widespread risk aversion as equities tumbled in response to a more hawkish Fed and with the S&P 500 poised to enter a bear market. In addition, the currency pair will be closely eyeing the release of preliminary US durable goods orders and personal consumption expenditure data for the month of November.

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--- Written by Megha Torpunuri, DailyFX Research Team