AUD/USD reached new highs on a rise in jobs, but this was stopped by a fall in the price of gold, and renewed dollar strength that comes from drops in the stock markets. The strength of the Australian economy should make this break temporary.
This renewed dollar weakness, although it’s felt strongly in EUR/USD, isn’t so significant. It isn’t pushed by fear – fear that pushes people to forex.
The Australian employment change showed a rise of 24.5K jobs. This was a big positive surprise. Economists were expecting a fall of 10K jobs, and this rise boosted the Aussie, despite a rise in the unemployment rate to 5.8%.
AUD/USD reached a high 0.936 following this release, breaking the former YTD high of 0.9327. But this was short-lived, when bigger forces came into action.
Gold: The price of gold already reached previously uncharted areas and touched a record price of $1123. The Australian dollar and gold are closely tied. As gold fell below $1110, also the Aussie fell.
Stock markets: Also the American stock markets took a break from the ongoing rally. The drop in the indices ignited dollar buying which was felt across the board.
EUR/USD, which feels these moves in the strongest manner, fell down to 1.4851, and bounced only at the support line. It also suffers from the Yuan appreciation.
The dollar strength didn’t skip the Aussie as well, and it fell down to 0.9243, reaching the levels at the beginning of the week.
I believe that this is a short break. As we see in the fresh employment figures, the ongoing rate hikes and the strong growth in China, the Aussie has all the reasons to rise. Another rate hike in December should lift the Aussie higher.
For more technical insight about the Aussie, check out the weekly AUD/USD forecast.Get the 5 most predictable currency pairs