The US dollar has continued gaining strength while weaker metals prices have seen the Aussie dollar fall below the key 80 cent level.
“A stronger US dollar and falling metals and iron ore markets over the past 12-18 hours have knocked the Aussie back below 80 cents to 0.7983,” said Greg McKenna, chief market strategist at FX and CFD provider AxiTrader in Sydney.
“That’s down around 0.44% from 7 am yesterday morning and it’s left the AUDUSD sitting pretty much right on the important 3-monthly uptrend support.”
August Jobs Report
According to McKenna, the August jobs report for Australia due out today is going to be critical for the Aussie dollar going forward.
“That makes the release of the August jobs report here in Austalia at 11.30 am AEST today a critical input into whether the uptrend holds or the Aussie heads toward 0.7930, perhaps 0.7850,” McKenna said.
With the market looking for an increase of 15,000 jobs and the unemployment rate to stay at 5.6%, anything below that could see a push lower in the Aussie dollar.
McKenna added, “If the market is right then that would be viewed fairly benignly by traders and it will be the release of important Chinese data on retail sales, industrial production, and urban investment 30 minutes later that could get traders excited.”
The latest Reuters poll says the market is forecasting a rise of 10.5% for retail sales, 6.6% for industrial production, and 8.2% for urban investment.
A big day for the Aussie dollar
“These data points are doubly important for the Aussie because they may also impact moves on Shanghai and Dalian futures exchanges for metals and iron ore. So it’s potentially a big day for the Aussie,” cautioned Greg.
View on future interest rate rises
But it was RBA board member, Harper, whose thinking in regards to the consumption and GDP gave a lot of perspective on any future rate rises.
Specifically, Harper said, “Consumption is two-thirds of gross domestic product,” Harper said. “If households as a group were suddenly to decide that we really can’t afford this now, we’re going to start to slow up consumption to keep ourselves on an even keel, then that will certainly pull GDP growth away from where we want it to be.”
To which McKenna commented, “That sounds very much like a man who won’t be voting for a rate rise anytime soon.”
From a technical point of view, the Aussie dollar chart is building an interesting story.
“On the dailies, the AUDUSD is just clinging to the 3-month uptrend and a break of last night’s low at 0.7970 could usher in a move toward 0.7850 with 0.7930 as support on the way down. Resistance remains in the 0.8050/65 region,” noted Greg.
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