🔮 Better than the Oracle? Our Fair Value found this +42% bagger 5 months before Buffett bought itRead More

AUD/USD Maintains Positive Momentum Despite Disappointing Job Report

Published 18/01/2018, 10:54
AUD/USD
-
NZD/AUD
-
DX
-
NOK/AUD
-
AU2YT=RR
-
AU10YT=RR
-

It has been a quiet week so far for the Australian dollar. The Aussie economic calendar was relatively light, while market participants mostly focused their attention on Trump comments and fears about an US government shutdown. Even though AUD/USD spent most of the week trading range bound - between 0.7930 and 0.8023 – the pair printed a 4-month high on Wednesday at 0.8023. The job report released earlier today didn’t change anything. In December, the unemployment rate rose slightly to 5.5% from 5.4% in the previous month, while the participation rate inched up to 65.7%.

Since early December last year, the Aussie has surged across the board, appreciating against all G10 currencies, with the exception of the New Zealand dollar and the Norwegian krone (+1.25% and +0.85% versus the AUD since December 3rd, respectively). This positive momentum could be mainly explained by the recovery in the country’s interest rates. Indeed, over the last month, the entire yield curve has shifted higher with the 2-year sovereign yield rising 40bps to 2.10%, while on the longer end of the curve the 10-year one climbed 37bps to 2.83%.

However, the 2-year interest rate differential between Australian and US has been quite stable over the last few weeks, suggesting that the recent appreciation of the Aussie is rather due to the USD weakness. There is little chance this situation will change in the short-term as market participants remain sceptical that Trump will deliver what was announced, while the battle is raging in the Congress. There are just too many uncertainties for investors to go long on USD, even though the underlying economic indicators are all on green.

AUD/USD is on its way to test September’s high at 0.8125. Another key resistance can be found at 0.8295 (high from January 2015). The momentum is still positive for Aussie; however, the wind can quickly turn around, especially if investors’ confidence in Trump starts to build.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.