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  • Thursday’s softer US data further raised the probability of Fed rate cut move in October.
  • Sliding US bond yields added to the recent USD selling bias and remained supportive.
  • Friday’s key focus will remain on the US monthly jobs report, popularly known as NFP.

The AUD/USD pair added to the previous session’s goodish move up and continued gaining some follow-through traction through the early European session on Friday.
 
The prevalent US Dollar selling bias assisted the pair to build on this week’s goodish rebound from multi-year lows and tick higher for the third consecutive session. Thursday’s weaker US ISM non-manufacturing PMI further bolstered fears of a US recession and forced investors to price in a higher probability of yet another interest rate cut by the Fed at its upcoming meeting on October 30.

A combination of factors remain supportive

Fed rate cut expectations were further reinforced by the ongoing slide in the US Treasury bond yields to over one-month lows, which continued exerting some downward pressure on the Greenback. This coupled with optimism over a possible resolution to the prolonged US-China trade disputes further underpinned the China-proxy Australian Dollar and remained supportive of the ongoing positive move.
 
Despite the recent bounce of around 90 pips, the pair remained well below weekly tops set on Tuesday as investors seemed reluctant to place any aggressive bids ahead of the key data risk – the release of US monthly jobs report. The headline NFP print is expected to show that the US economy created 145K jobs in September and the unemployment rate is expected to hold steady at 3.7%.
 
Meanwhile, the closely watched wage growth data, anticipated to have risen by 3.2% year-on-year rate during the reported month, will play an important role in influencing the USD price dynamics and eventually provide some fresh impetus for the pair’s next leg of a directional move.

Technical levels to watch