AUD/USD Soars on Employment Data, Eyes Stocks and US-China Talks

2019-01-24 01:00:00 Megha Torpunuri

TALKING POINTS – AUD/USD, EMPLOYMENT DATA, TRADE WARS, CPI

Australian Dollar gained against the greenback on better-than-expected employment data
AUD/USD prices’ rally brings key levels 0.71611-0.7234 into play as possible support
US-China trade negotiations, 4Q Australian CPI, and US shutdown in the spotlight

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The Australian Dollar strengthened against its US counterpart after local employment data crossed the wires during Thursday’s Asia Pacific trading session. The Australian economy added 21.6k jobs in December, beating the estimate of 18.0k, but down from the prior 39.0k. Meanwhile, last month’s unemployment rate clocked in at 5.0%, a decline from both the forecast and previous 5.1%. Full-time jobs decreased by 3.0k, an uptick from November’s -7.3k.

AUD/USD Chart (5-minute)

Chart prepared in TradingView

However, the slight uptick in prices may not continue, despite AUD/USD’s recent rally following confirmation of a Morning Star Bullish Reversal. The Aussie is trading in a familiar range, which has served as support levels in May and December 2016 at approximately 0.71611-0.7234. A break above this could indicate further gains, but is unlikely as the prolonged US government shutdown and threats of more tariffs against China could lead to further falls in equities and the pro-risk AUD.

AUD/USD Chart (Daily)

Chart prepared in TradingView

Looking ahead, the currency pair will closely eye the outcome of upcoming trade negotiations between the US and China later this week. Continued friction and a failure to reach a deal between the world’s two largest economies could lead to a bearish reversal. In addition, AUD/USD will also look to 4Q Australian CPI data and the possible release of last quarter’s US GDP next week.