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There was a degree of caution heading into the emergency meeting among European finance ministers. While there have been conflicting reports, it seems no progress has been made and European leaders will reconvene on Monday to try and iron out a deal. Until then, there will be plenty of headline risk inherent in this market.
AUD/USD is starting to feel the pressure and has lost its grip on the $0.7800 handle heading into today’s January jobs numbers. Data is due out at 11.30 AEDT and the market is expecting unemployment to rise to 6.2% with 4,700 jobs lost.
We also had RBA Assistant Governor Guy Debelle speaking and his comments didn’t yield much volatility. The MI inflation expectations reading will be one to watch for, given disinflation has been a major buzzword recently. Should jobs data disappoint today, then markets are likely to ramp up March cut expectations and this would weigh on the AUD.
A retest of February lows at $0.7627 could be in play if data disappoints. However, strong data could lead to a move back to the $0.7800 handle, in which case traders will be eyeing shorts in that region for the pair.