Last
week, the NFP missed
expectations for a second time in a row and the previous numbers were all
revised lower. This was seen as a disappointment as the labour market seems to
be a touch weaker than previously expected. Nevertheless, the unemployment rate
fell once again and lessened the disappointment from the miss in the payrolls
number. The worse part for the Fed is that the average hourly earnings beat
expectations, and such high wage growth is not consistent with a sustainable
return to the 2% target. It’s worth reminding though, that the Fed will see
another NFP report before the September meeting, so this NFP doesn’t change
much, but the data leading into the meeting can still weigh on sentiment.
The RBA, on the other hand,
kept its cash rate unchanged with a slight tweak to a line in
the policy statement that suggests that they are leaning more on the dovish
side. The data makes their job harder as the Australian Jobs report surprised again to the upside but
the Inflation report missed expectations. Nonetheless,
they will see more data now before the next meeting and can make a better-informed
decision.
AUDUSD Technical Analysis –
Daily Timeframe
On the daily chart, we can see that the AUDUSD
selloff from the 0.69 handle has extended past the 0.6563 support and the
sellers are now targeting the 0.6459 low with a high chance of seeing a break
lower. This is clearly a sellers’ market as the price has been printing lower
lows and lower highs and the moving averages are
crossed to the downside. The buyers will need a strong fundamental catalyst to
switch the bias in the favour.
AUDUSD Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that AUDUSD after
the break lower rallied back into the previous swing low area where we had also
the 38.2% Fibonacci retracement level
for confluence. That’s
where the sellers piled in to target the 0.6459 low. The buyers will need the
price to break above the resistance around
the 0.66 handle to switch the bias from bearish to bullish.
AUDUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we
have a minor support at the previous low. A break below should see more sellers
piling in to target the low and eventually a break lower. More aggressive
buyers may try to step in here to target the 0.66 handle and a break higher.
Upcoming Events
This week the
main event will be the US CPI report on Thursday. The market is likely to focus
more on the Core readings as this is what the Fed is more interested in. Higher
than expected data should give the US Dollar a boost as the market’s
expectations will be skewed more on the hawkish side. On the other hand, lower
than expected readings should weigh on the USD as it would support the
soft-landing narrative in the short-term. At the same time of the US CPI data,
we will also see the latest US Jobless Claims report, which is less likely to
move the market since it’s released at the same time of the CPI, but big
surprises should have an effect, nonetheless. Finally, we conclude the week
with the University of Michigan Consumer Sentiment report on Friday where the
market is likely to focus more on the inflation expectations figures.
This article was written by FL Contributors at www.forexlive.com. Source