- Subdued trading action continues ahead of NFP data.
- US Dollar Index inches higher toward 97 on Friday.
- Markets expect the unemployment rate to stay unchanged at 3.6% in the US.
After advancing to multi-month highs at 0.7050, the AUD/USD pair staged a technical correction on Thursday and continued to push lower on Friday. However, the fact that the pair remains above the critical 0.70 handle shows that sellers haven’t been able to take control of the price action yet. As of writing, the pair is down 0.06% on the day at 0.7015.
Earlier today, the AiG Performance of Construction Index in June improved to 43 from 40.4 in May but was largely ignored by the market participants.
On the other hand, with the market demand shifting toward the greenback amid expectations of the European Central Bank making a dovish shift in its policy and concerns over the Brexit uncertainty, the US Dollar Index is climbing higher toward the 97 mark, not allowing the pair to turn north.
In the second half of the day, markets will be paying close attention to the U.S. Nonfarm Payrolls report and its potential impact on July rate cut expectations.
Previewing the data, “We are sceptical that the Fed would act from one data point alone, but if the numbers confirm a loss of momentum in the labour market or are extremely weak, the focus will return immediately to the potential for a 50bps cut,” AND analysts said.
“Market expectations are for a 160k rise (last: 75k), which would leave the 3-month average unchanged at around 150k and 6-month average at 160k.”
Technical levels to watch for
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