AUD in focus ahead of jobs data

19 July, 2018

The big mover ahead of us today is looking to be the Australian employment data which is due out shortly. Markets will be keenly focused on this as the labour market has been hit and miss for some time. More importantly the growth in the labour sector has primarily been led by part-time jobs as well, so analysts will be keenly watching this aspect. But the main factor will be the Reserve Bank of Australia and their take on the employment market, with markets hopeful that a strong showing may push the bank to start being a tad more hawkish, especially if inflation figures start to pick up. I do feel it's a little early to be hawkish, and the Australasian region as a whole is struggling as the strong USD is leading to weaker commodity prices as of late - this has been partially offset though by the fall in the Australian dollar though.

Looking at the AUDUSD on the charts and it's clear to see that the AUD has been a little shy when it comes to moving lower as of late. The main level of support in the marketing being at 0.7337 which has seen some stiff bullish activity in recent weeks, and yesterdays moves towards that level were quickly fended off. With the upcoming job reports we could see large swings here, and I would expect some very strong pressure on the 0.7337 support level if it comes in weaker than expected. If the report shows signs of strength then expect the AUDUSD to look to jump to up resistance at 0.7467, and potentially go higher to 0.7527. Nevertheless, the 50 day moving average is also something to be acutely aware of as the AUDUSD does have a habit of playing of this from time to time as can be seen.  

The other big mover today was of course oil markets which saw a bounce in the market despite there being an oil surplus in the official US inventory data. A surplus was widely expected based on private data, however coming in at 5.84M was quite large compared to what analysts expected. The market though was more focused on gasoline data which showed still a heavy drawdown in that area with -3.16M (0.7M exp), which proves that there is still demand for the commodity in the US market.

As a result of the move oil has surged higher on the charts, pushing through resistance at 67.45 and with the potential to move higher to 69.38 if we were to see some dollar weakness or positive oil news released. If the momentum can't be sustained then I would anticipate support at 66.03 and 63.98 to be the likely next levels to find themselves under pressure. But I would be cautious of the bulls more so given the strong defence we saw at the 66.03 level today.  


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