The US released a terrible jobs report: only 142K jobs gained on top of weaker gains beforehand and no advance in wages. It was way below expectations and the US dollar suffered across the board.
However, this didn’t persist against the Australian dollar.
AUD/USD made a move to 0.7065, but that was it. From there it changed course and fell to a low of 0.7002. Why can’t the Aussie ride against the soft greenback?
The reason lies in the Aussie’s role as a risk currency: if the US cannot lead the world to stronger growth, how can Australia? Well, Australia depends on China more than any other country, but also the world’s No. 2 economy is not doing so well.
In addition, if the Fed doesn’t hike as a result of this bad report (and other unimpressive data) we could see and commodity prices continue crashing, the Australian dollar should be weaker.
The RBA has linked between the exchange rate and commodity prices. If the Aussie doesn’t fall on its own due to China, the US and commodity prices, it could get a helping hand from the RBA.
Glenn Stevens and his colleagues convene on Tuesday, October 6th, to make their monthly decision. Will they cut the interest rate? Perhaps not too soon, but they certainly introduce a verbal intervention to weaken the A$.
Another opinion: Enter Autumn – AUD in demand – ANZ
Apart from the 0.70 magnet, we have the double bottom at 0.6935. On the topside we have 0.71 as important resistance. Here is the chart:
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