AUD surges on jobs surprise

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

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.

Click to enlarge

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.