AUD/USD: Consolidates Fed-led losses near 0.7300, eyes Aussie jobs report

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  • AUD/USD keeps recovery moves from 0.7277, nursing post-FOMC losses from 0.7331.
  • Fed reiterated readiness to act with no immediate urgency, mildly revising up growth forecasts.
  • Market players regain confidence amid expectations of prolonged easy money policy, recent Sino-American trade friendship despite WTO ruling.
  • Australia’s August month employment data may disappoint buyers but vaccine hopes, trade optimism stay ready to offer surprises.

AUD/USD stays on the post-Fed pullback mode while regaining the 0.7300 mark, currently around 0.7308, as Aussie traders set their screens for the key Thursday. Having initially cheered trade positive news and upbeat China data, coupled with the pre-FOMC USD weakness, the quote slumped after the Fed’s message got a warm welcome by greenback buyers. Though, the recovery in market sentiment ahead of the August month Aussie employment figures helps the quote to remain positive after four consecutive days of gains.

After Fed’s status-quo, Aussie data in the spotlight…

The US Federal Open Market Committee (FOMC) revised its statement a bit to accommodate the latest twist in inflation targeting while repeating its promise of ultra-easy monetary policy on Wednesday. The Fed also revised the economic forecasts a bit upwards than the June month’s worrisome projections while expecting no rate change in the benchmark interest rate (Fed rate) soon.

The US dollar marked notable gains post-Fed whereas global equities dropped amid fears of hidden reluctance by the US policymakers to add more funds.

Earlier on Wednesday, China’s Global Times cited the dragon nation’s recovery moves and the People’s Bank of China (PBOC) raised the Yuan fix by the most in five months. The same helped the AUD/USD prices to remain firm irrespective of mixed prints of the second-tier data at home. The run-up also benefited from the US Retail Sales data that weakened below 1.0% forecast and 0.9% prior to 0.6% MoM in August.

Talking about the trade tussle, the US is mostly easy with China and hasn’t fired any trade-negative shots even if the Trump administration hates the World Trade Organization’s (WTO) verdict on sanctions against Beijing. On the other hand, the Asian major prepares heavily to be a self-reliant nation and ignores the trade jitters.

Elsewhere, the coronavirus (COVID-19) numbers have been worrisome off-late but the hopes of a vaccine dim the risk-off mood. Furthermore, chatters that the UK policymakers are ready to adjust on fisheries also trimmed the no-deal Brexit risk.

Against this backdrop, Wall Street closed mixed with Nasdaq losing over 1.0% whereas the US 10-year Treasury yields gains around two basis points to 0.699% by the end of Wednesday.

Looking forward, AUD/USD traders will be more interested to know the negative impacts of Victoria’s lockdown on the headline jobs report. Ahead of the release,  FXStreet’s Chief Analyst Valeria Bednarik said that The market expects to see 50K jobs were lost in the month, while the unemployment rate is foreseen at 7.7% from 7.5% in July. This last, however, remains well below the 10% forecasted by the RBA by the year-end. The market observer also mentioned, “Should the report beat expectations, particularly with upbeat full-time new jobs, AUD/USD could surge beyond 0.7413 and approach the 0.7500 figure. After the dust settles, speculative interest could take profits out of the table if the prices nears this last, but will likely find a new comfort zone above 0.7400.”

Read: Australian Employment Preview: Victoria’s lockdown taking its toll on employment

Technical analysis

Sustained trading beyond 21-day EMA, at 0.7261 now, keeps the pair directed towards August 31 high of 0.7416. Also acting as the key downside support is an ascending trend line from July 14 that currently stays around 0.7225.

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