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AUD/USD clings to 100-day SMA near 0.6845 with eyes on Aussie employment data

  • AUD/USD struggles to extend recovery from six-week low ahead of the key catalyst.
  • Risk aversion, mainly driven by the news concerning Chinese virus and trade headlines, has weighed on the pair off-late.
  • The Australian bushfire could have its impact on the data, RBA stood ready for action.

AUD/USD registers modest changes to 0.6845 during the early Asian morning on Thursday. The Aussie pair have recently been weighed down by the market’s risk-off mood, mainly affected due to the headlines from China and Davos. Traders will keep eyes on the upcoming employment numbers to determine whether the wildfires have its impact on employment or not.

Employment data matters…

Given the RBA’s emphasis on the unemployment data, investors will keep eyes on the likely unchanged 5.2% figure to forecast the Australian central bank’s next moves. The odds of the bank’s action during the early-February meeting have dwindled so far.

Other than the December month seasonally adjusted Unemployment Rate, traders will also keep eyes on Employment Change, expected 15K versus 39.9K, as well as Participation Rate wherein no change is likely to 66% mark.

While highlighting the severity of the data, ANZ said, “A gain of 10k or less for the month would confirm a sharp slowing in employment growth since Q2 and Q3 last year. While employment is a lagging indicator, a sharp slowdown will cast doubt on the sustainability of the economy’s modest revival.”

China, Davos kept the pair under pressure…

Despite the World Health Organization’s (WHO) appreciation of Beijing’s quick and strong reaction to the outbreak of coronavirus in Wuhan, the global organization is yet not turned down odds of terming the incident as a global emergency.

Elsewhere, the US-China trade stories are flashing few good signs whereas the US-EU relations are likely to worsen if the US President Donald Trump’s latest threat from Davos is to be believed.

Other than these catalysts, US President Trump’s impeachment hearing has also weighed on the market’s risk tone and dragged the Aussie down to the lowest since December 11 during the previous day.

It also affected the US treasury yields while Wall Street managed to barely avoid the losses amid upbeat results.

Looking beyond the Aussie data, trade/political headlines will have their say till the US markets open.

Technical Analysis

An upward sloping trend line since early-October highlights the importance of 0.6830 as the key support holding the key to pair’s further downside to sub-0.6800 area. Alternatively, buyers will refrain from the big positions unless witnessing a daily closing beyond a 21-day SMA level of 0.6915.

 

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