All trading involves risk. Losses can exceed deposits.

AUD surges on jobs surprise

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

All trading involves risk. Losses can exceed deposits.
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.

Click to enlarge

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.