Australian Dollar Analysis and Call Points
- AUD / USD Movement from one extreme to another
- The RBA is the main focus for next week
- An example of a classic NFP Reaction
From one extreme to another
Green-backed sales have been the dominant trend in the FX room since President Powell’s speech, while a number of soft labor market prints (ADP + ISM employment index) have exacerbated the move. However, as I have previously noted, as market participants are in favor of a somewhat softer – than – expected NFP report, this would lower the bar upwards in today ‘s issue, surprisingly. This is not to say that the NFP report will be printed beyond expectations, but it does say that traders are likely to have too few dollars to issue.
Elsewhere and to my surprise Australian dollar has been impervious to the release of persistently weak data from China. Admittedly, domestic data have been more robust, but the importance of Q2 growth has declined somewhat, given that the third quarter has been affected by closure measures and thus GDP is likely to have declined. Nevertheless, risk aversion has been as lively as ever, as US indices have continued to hit recent highs, holding the Aussie alongside other high beta currencies. Although the special performance of the currency may also be due to the fact that the AUD had been oversold in recent weeks, moving from one extreme to the downside (Figure 1). With that in mind, although the NFP report is causing some volatility, I suspect that this corrective rally will have little time in the tank to expand it higher.
The main highlight of the RBA AUD
Looking at next week, ttheme For Aussie, the focus is on the RBA’s monetary policy, according to which the consensus wants the central bank to postpone the decision to lower the rate of asset purchases to $ 4 billion a week from $ 5 billion a week against the deteriorating Covid. hit a record level.
AUD / USD chart: daily schedule
A A classic case of NFP trading
After paying a lot of attention to the NFP indicator again, I thought I’d take a look at last month’s edition, which had been a textbook on trading with the NFP.
First, by the time of publication, the ADP report was significantly unfulfilled (330k vs. 695k exp), which in turn lowered the NFP report to a surprise. Together with Vice-President Clarida’s surprisingly vague comments, this had increased the market’s sensitivity to the NFP report.
After the publication of the NFP report, which had been a very strong reading both in terms of title and details.
NZD / USD immediately lowered before returning to the previously reported level until by that time dust settled and market participants digested the report, NZD / USD then started make a constant movement lower. It is therefore worth emphasizing that the immediate decline is likely to be caused by the initials / HFTs, so jumping this course is likely to lead to poor entry. As a retailer with a higher latency, it is better to wait for the dust to settle.
NZD / USD trading during NFP