17th September 2020 - AUD consolidates Fed-led losses near 0.7300, eyes Aussie jobs report


Good Morning,

Market Headlines

Wall Street closed mixed with Nasdaq losing over 1.0% whereas the US 10-year Treasury yields gains around two basis points to 0.699%. The US central bank upgraded its economic forecasts but indicated rates would remain near zero for a few years, all widely expected. Brent crude oil futures rose 4.3% to $42.30, copper fell 0.2%, iron ore fell 4.1% to $124.10 and gold rose 0.2%.

Currencies

AUD/USD: 0.7279 – 0.7345

EUR/USD: 1.1788 – 1.1883

GBP/USD: 1.2877 – 1.3008

USD/JPY: 104.80 – 105.40

USD/CAD: 1.3127 – 1.3192

NZD/USD: 0.6714 – 0.6757

AUD/JPY: 76.41 – 77.18

AUD/NZD: 1.0835 – 1.0880

AUD Thoughts

- AUD/USD keeps recovery moves from 0.7277, nursing post-FOMC losses from 0.7331.

- Fed reiterated readiness to act with no immediate urgency, mildly revising up growth forecasts.

- Market players regain confidence amid expectations of prolonged easy money policy, recent Sino-American trade friendship despite WTO ruling.

- Domestic employment data may disappoint buyers but vaccine hopes, trade optimism stay ready to offer surprises.

Looking ahead, markets will be more interested to know the negative impacts of Victoria’s lockdown on the headline jobs report. The market expects to see 50K jobs were lost in the month, while the unemployment rate is forecasted at 7.7% from 7.5% in July. Should the report beat expectations, with upbeat full-time new jobs, AUD/USD could have the potential to rally.

Sustained trading beyond 21-day EMA, at 0.7261 now, keeps the pair directed towards August 31 high of 0.7416. Also acting as the key downside support is an ascending trend line from July 14 that currently stays around 0.7225.

Event Risk Data Today

Australia: Following July’s rebound in employment of 114.7k, the Victoria shutdown and a levelling out of employment growth in NSW is expected to see employment decline overall. Market expect falls of 50k and 35k respectively. The unemployment rate should edge up from 7.5% in July (f/c: 7.7%).

New Zealand: Market expects a GDP contraction of 12.5% (prior: -1.6%).

Eurozone: Final CPI inflation for August is expected to confirm inflation remained negative for another month after reaching record lows in July (prior and market f/c: -0.4%).

UK: No policy change is expected from the BoE, although downside risks will be highlighted.

US: Housing starts (prior: 22.6%, market f/c: -3.1%) and building permits (prior: 18.8%, market f/c: 3.2%). Philly Fed index (prior: 17.2, market f/c: 15.0). Initial jobless claims have continued to edge lower as increased numbers claim jobless benefits (prior: 884k, market f/c: 850k).

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