AUD/USD eases from tops on stellar US jobs report, still comfortable above 0.70 handle

   •  Chinese services PMI/US-China trade optimism helped build on the overnight strong rebound.
   •  Strong US monthly jobs report prompts some USD strength and now seemed to cap gains.
 
The AUD/USD trimmed a part of its early gains and quickly retreated around 15-20 pips on upbeat US monthly jobs data.

The pair built on the overnight strong recovery move from almost a decade low and was further supported by today's better-than-expected Chinese Caixin Services PMI print for December. This coupled with renewed optimism over a possible resolution to the US-China trade disputes provided an additional boost to the China-proxy Australian Dollar.

The positive momentum, however, started losing steam amid a modest pickup in the US Dollar demand following a stronger than expected headline NPF print, showing that the economy added 312K new jobs in December as against 177K anticipated. Adding to this previous month’s reading was also revised higher to show an addition of 176K jobs as compared to 155K reported earlier. 

This coupled with another month of a solid growth in average hourly earnings, coming in at 0.4% m/m (0.3% expected) and 3.2% yearly rate (anticipated to tick lower to 3.0%), did provide a minor lift to the greenback, though was largely offset by an unexpected rise in the unemployment rate to 3.9% from 3.7% previous and thus, helped limit any immediate downside.

With today’s key event risk out of the way, it would now be interesting to see if the pair is able to build on the positive momentum or continues with its struggle to make it through the 0.7065-70 supply zone as the focus shifts to the upcoming US-China trade talks.

Technical levels to watch