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AUD surges on jobs surprise

Greenback weakness remains a key theme as US data continues to disappoint.

AUD
Source: Bloomberg

On the docket we had the empire state manufacturing index and industrial production, which both disappointed. The Beige book showed most parts of the US economy continued to improve but the overall language was very cautious.

AUD/USD climbed to a high of $0.7700 on the back of USD weakness and managed to extend its gains on the back of the local jobs numbers. The jobs numbers showed a much better-than-expected 37,700 jobs added while the unemployment rate dropped to 6.1%.

The data also brought some positive revisions to the previous month’s data and saw market pricing for rate cut expectations drop significantly. AUD/USD managed to trade as high as $0.7784 before a minor pullback but momentum remains skewed to the upside.

This level is also the 61.8% retracement of the March high to low and seems to be presenting a bit of resistance in the short term. A close above this level could see the pair squeeze even higher.

While the medium-term fundamentals still point to a weaker AUD, I would be cautious about shorting the pair just yet.

AUD/USD
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