After fluctuating in a 30-pip range in the first thirty minutes following the release of the NFP report from the United States, the AUD/USD pair started to trade calmly around the pre-data levels. At the moment, the pair is trading at 0.7603, up 0.22% on the day.
In the last year or so, the way the market reacts to the NFP data has changed significantly. In the past, it was very straightforward: If the data was positive, USD strengthened and vice versa. Now investors usually ignore the actual nonfarm payroll reading and focus on other aspects of the report. The fact that the Fed has been basing its monetary policy decisions on the inflation force investors to concentrate on other areas of the report that could potentially impact the growth in wage inflation.
Although today's data showed that the nonfarm payroll increase came in at 222K, its second-best level in 2017, average hourly earnings stayed unchanged at 0.2% while the participation rate increased just a little to 62.8%. On the back of the data, the US Dollar Index struggled to find a direction. After dropping sharply to mid-95 area, the index quickly leaped to 95.90 but couldn't preserve its momentum. At the moment, the index is at 95.80, up 0.25% on the day.
- US: Total nonfarm payroll employment increased by 222,000 in June
In the meantime, crude oil prices continue their weekly roller coaster ride. The barrel of West Texas Intermediate is losing more than 2% on Friday, making it difficult for the commodity-sensitive currencies like the aussie to gather strength.
On a weekly basis, the pair is losing nearly 100 pips and this week's fall looks more than just a technical correction of previous week's gains. The RBA's neutral stance has been the primary drag on the AUD. A weekly close below the 0.76 handle could open the door for further losses. Short-term supports for the pair could be seen at 0.7535 (100-DMA) and 0.7500 (psychological level). On the upside, resistances align at 0.7710 (Jun. 30 high), 0.7750 (Mar. 21 high) and 0.7800 (psychological level).