AUD/USD choppy but ultimately higher in upper 0.7100s as dollar slides post-mixed jobs report By Frank_Macro AUDUSD
g 50 pips in wake of a mixed US jobs report to the 0.7180s. The rally has stalled in this area given the presence of the 21-day moving average at 0.7190 and the Monday/Tuesday lows at 0.7185. On the day, that means AUD/USD is on course to gain around 0.3%, a fairly uninspired performance when compared to the gains some of its G10 peers are enjoying versus the US dollar in wake of the jobs data. And on the week, AUD/USD is still set to close about 1.2% lower.
FX strategists were perplexed at the dollar reaction to the latest jobs report. Yes, the headline monthly gain in non-farm payrolls came in at 199K, well below median forecasts for 400K. But that won’t matter too much to the Fed has acknowledged that the main problem holding the US labour market back from further job gains is a lack of labour supply, not demand. Meanwhile, the unemployment rate dropped under 4.
The jobs report thus meets the criteria that, so long as labour market progression remains reasonable, rate hikes will soon be warranted. In other words, the central banks tightening plans for 2022, as laid out at the December meeting and in its minutes, remain very much intact. This helped boost long-term US bond yields, with the 10-year yield hitting its highest since January 2020 at just under 1.80%. Typically, surging US yields would be dollar positive.
on Friday. Fed Chair Jerome Powell will also testify on Monday. That’s plenty of catalysts for dollar bulls to latch onto.
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