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AUD/USD hits fresh 2-day lows near 0.7200

  • AUD/USD trims weekly gains on Friday on the back of a stronger US dollar. 
  • Next week data includes the Australian employment report. 

A rally of the US dollar late on Friday pushed AUD/USD further lower. The pair dropped to 0.7220, hitting a fresh 2-day low. From Thursday’s top at 0.7301 (1-month high), lost almost 80 pips and is about to end the week facing bearish pressure. 

The greenback gained momentum following US data (PPI and consumer confidence, both came above expectations) and rose further extending the rally that started late on Wednesday. The US Dollar hit 97.00 and was about to post the highest weekly close since June 2017. 

The AUD/SUD pair is still in positive territory for the week but far from the highs. Price was unable to hold on top of the 20-week moving average at 0.7260 and previously the rally found strong resistance at 0.7300. 

Some consolidation ahead between 0.7300 and 0.7200 seems likely for the next session. The Aussie needs to break and hold on top of 0.7300 to open the doors to more gains while below 0.7175, more losses are likely. 

Next week data: AU jobs, Powell and US CPI

The economic calendar shows key events for next week in the US CPI data, retail sales and Powell’s testimony. The CPI is expected to show a gain of 0.2% on October and retail sales of 0.5%. Fed Chair will head for Congress the week after the Fed left the key interest rate unchanged and signaled a rate hike in December. 

In Australia, the key numbers will come from the employment report on Thursday. Analysts at TDS point out that the wage price index evolutions is key for the Reserve Bank of Australia. “With the 3.5% jump in the minimum wage likely muted by the simultaneous trimming of penalty rates, difficult to see wage growth exceed 2.35%/y (mkt 2.3%/y, 1/4 look for 2.4%/y). An upside surprise, however, would erase recent market disappointment in retail sales and CPI, and lift pricing for a rate hike next year (currently ~70% priced for Nov ’19)”. 
 

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