AUD/USD, AU Jobs Report, Market Sentiment – Talking Points
- Wall Street finishes mixed after stronger-than-expected US retail sales data
- Mainland Chinese markets set to reopen following extended holiday break
- AU jobs report for January 29.1k versus 30.0k expected, Jobless rate falls to 6.4%
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US stocks ended the trading day mixed, with the best performer on Wall Street being the Dow Jones Industrial Average, closing 0.29% higher. On the other hand, the small-cap Russell 2000 index was the worst performer, closing 0.74% in the red. The S&P 500 was nearly unchanged on the day. Meanwhile, the Nasdaq Composite sank 0.58% as technology shares dragged the tech-heavy index lower.
Energy commodities continued to move higher, bolstered by ongoing severe weather threats that have caused chaos across the southern and central United States this week. Crude oil prices surged over the 60 handle for the first time since January 2020 as energy demand soared. API crude oil stocks saw a 5.8m draw today, well under the 2.175m draw expected by analysts.
Elsewhere, the US Dollar rose following strong economic data on Thursday when retail sales crossed the wires above the consensus forecast. According to the Finance Prop Economic Calendar, US retail sales for January rose 5.3% on a month-over-month basis versus expectations of 1.1%. The DXY index climbed above the 91 handle, its strongest level since earlier this month.
Crude Oil, Russell 2000, US Dollar – 15 Minute Chart
Chart created with TradingView
Thursday’s Asia-Pacific Outlook
APAC markets will be back in full swing with mainland Chinese exchanges set to reopen following the extended Lunar New Year holiday break. Hong Kong’s Hang Seng index (HSI) gained 1.10% on Wednesday, pushing prices above the 31,000 level. Japan’s Nikkei 225 index pulled back 0.58% following its move above the 30,000 mark earlier this week.
The Australian jobs report (discussed more below) will likely drive price action during Thursday’s session, with no other high-impact market events on today’s docket. Chinese markets may be subject to additional volatility as equity prices play catchup after the holiday break. That said, investors may take a step back to assess economic conditions following the downbeat US session where Treasury yields pulled back from recent highs.
Australian Jobs Report – Written by Brendan Fagan, Intern for Finance Prop
Australian unemployment for January came in at 6.4% against an expected reading of 6.5%. This represents a drop from December’s reading of 6.6%. The change in full-time employment came in at 59,000 against an expectation of 35,700. The positive data reinforces the bullish sentiment swirling around Australia’s economic recovery and will likely provide additional tailwinds for further economic growth in the months to come.
Australia has undergone a robust economic rebound after the country reopened following virus-induced lockdowns. Treasury Secretary Steven Kennedy recently stated, “the Australian economy is recovering faster than expected.” Unemployment has trended lower, while labor force participation continued to improve. The reopening has helped push AUD/USD to levels not seen since April 2018.
While AUD/USD has been on an impeccable run since March, a stronger Greenback — bolstered by rising US yields — dented AUD strength this week. USD sentiment also received a boost from stronger-than-expected retail sales data. However, risk appetite may soon improve as the reflationary theme strengthens. That scenario would likely help propel AUD/USD to fresh multi-year highs.
Australian Dollar Technical Outlook
The Aussie-Dollar’s near-term technical levels may quickly come into play as traders digest January’s jobs report. AUD/USD recently retraced lower following a breakdown from the 0.7800 psychological level. Support was offered by the upper bound of a symmetrical triangle, which gave way to an upside move earlier this month, along with the 12-day Exponential Moving Average.
The 78.6% Fibonacci retracement level from the January to February move may provide the most immediate area of resistance. The aforementioned 0.7800 level is likely bulls’ key target. However, if that is broken, confidence for a re-test of January highs may be on the cards. The MACD and Relative Strength oscillators are fairly neutrally positioned. Overall, price action may be subject to quick moves over the next few hours as the jobs data is digested.
AUD/USD Daily Price Chart
Chart created with TradingView
AUD/USD TRADING RESOURCES
— Written by Thomas Westwater, Analyst and Brendan Fagan, Intern for Finance Prop.com
To contact Thomas, use the comments section below or @FxWestwateron Twitter