- Retail sales in Australia increase modestly in May.
- US Dollar Index struggles to find direction for the third straight day.
- Markets expect NFP to increase 160K in June.
The AUD/USD pair climbed higher during the Asian trading hours on Thursday and touched its highest level since early May at 0.7050. However, the choppy market action didn’t allow the pair to preserve its bullish momentum and caused it to start consolidating its gains. As of writing, the pair was trading at 0.7025, losing 0.05% on a daily basis.
Earlier this week, the Reserve Bank of Australia announced its decision to cut the policy rate by 25 basis points but the fact that markets have been pricing this move since June amid disappointing macroeconomic data releases and dovish commentary from RBA officials helped the pair limit any potential losses.
On Thursday, the data published by the Australian Bureau of Statistics showed that after contracting by 0.1% in April, retail sales increased by 0.1% in May but fell short of the market expectation of 0.2%. In the early trading hours of the Asian session on Friday, the AiG Performance of Construction Index from Australia will be looked upon for fresh impetus.
Later in the day, the U.S. Bureau of Labor Statistics’ monthly nonfarm payrolls report will be the last significant fundamental driver of the week. Ahead of that event, the US Dollar Index is staying flat on the day at 96.75.
Previewing the NFP data, “The Nonfarm Payroll report affects the greenback through the Fed. That means, the report is relevant only if it can twist policymakers hands, one way or the other,” said FXStreet chief analyst Valeria Bednarik.
“Given that unemployment is at nearly fifty years low and that the US Federal Reserve has already hinted a possible rate cut in the upcoming months, only a huge deviation in the headline reading could trigger wide moves.”
Technical levels to consider
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