Originally published by AxiTrader
Quick Recap
After being left alone because traders had bigger fish to fry, the Aussie dollar came under aggressive assault last night. From a high around 0.7560 the Aussie lost the best part of a cent from high to low and at 0.7473 as I write is down 1.03% since 9am yesterday.
The selling in Chinese commodity futures markets re-awoke forex traders to the fact there was one big currency that had not been heavily belted by the US dollar this week. So here we are this morning awaiting a notoriously rubbery jobs report with the Aussie near the bottom of the past few months range.
0.7440/45 has to hold.
What You Need To Know
As I highlighted in my earlier report the Aussie dollar doesn’t seem to have been able to avoid the US dollar strength. And with a fall of 1% it’s easily the worst performer of the G10 overnight.
Why that is so when I was talking about the positives that are accruing to it longer term yesterday is best explained with reference to the continued unwind of the iron ore and other metal rallies we are seeing this week out of Shanghai.
That and the technical reality that it has failed to get back above the 2016 uptrend it broke out of last week also contributed to the sellers gaining the upper hand. That’s an ominous technical sign and the dip below the 200 day moving average won’t have escaped the notice of the bears – or even the very long speculative market.
7440/50 is the key now. If it breaks the Aussie could fall right out of bed as sellers look to see where the real level of support is. While the US remains strong…even if it doesn’t rally further, and while the commodity retracement continues the Aussie could remain pressured.
On the day it will be all about employment with October jobs released this morning at 11.30am. The market is looking for an increase of 20,000 jobs. But there will also be a lot of attention paid to the part time/full time split given the RBA has wondered, and worried, out loud about the real state of the labour market.
So it's not going to be as simple as saying 15 or 20 thousand jobs equals a good number. Traders and investors are going to dig deeper to try to find clarity from the fog of this number. We'll be looking at the participation rate as well as the PT/FT split and of course the unemployment rate.
That's not to say a big deviation in terms of headline number won't cause a reaction. 5000 jobs or lower and 25000 jobs or higher will move the market. But it feels like with the overnight price action the market is primed for another disappoinment from Australia's jobs data.
Have a great day's trading