- The Aussie is appreciating to retest the recent highs at the 0.7315 / 20 area.
- The US dollar is losing ground with all eyes on US labor data.
- AUD / USD remains biased to the downside while below 0.7370.
The AUD it is outperforming the rest of the major currencies on Thursday, appreciating beyond 0.6% against a somewhat weaker US dollar. The Aussie has extended its rebound from Wednesday’s lows of 0.7225 to test the top of the trading range for the past three weeks at the 0.7315 / 20 area.
US dollar declines with US labor data in focus
The AUD has been helped by some weakness in the US dollar and a moderate appetite for risk to make up for lost ground. The dollar is retreating against its main rivals with investors reluctant to place big bets on the USD ahead of the release of the September US Non-Farm Payroll report.
With all eyes on the timing of the Fed’s next move, the market has assumed that a strong payroll report on Friday will see the Bank announce the start of QE phasing out in November.
Furthermore, the market mood has improved markedly, which has been reflected in higher equity markets. Wall Street is posting gains of more than 1%, as investor concerns about the possible consequences of rising inflation levels have lessened with oil prices retreating from seven-year highs, while fears of a Government shutdowns in the US seem to have faded into the background for now.
AUD / USD remains negative below 0.7370 – Commerzbank
In a broader context, Karen Jones, Head of Technical Analysis at FICC at Commerzbank, however, sees that the pair is skewed to the downside while below 0.7370: “The short-term strength of the AUD / USD is seen as corrective. . The market recently failed the 4-month downtrend at .7370 and we will maintain a negative bias as long as we are capped here. Initial resistance is the ma of 55 at .7313 55 “.
Technical levels
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