Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6700.
- Add a stop-loss at 0.6500.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6500.
- Add a stop-lossn at 0.6700.
The AUD/USD exchange rate remained in a tight range as traders waited for the upcoming US nonfarm payrolls (NFP) economic data. It was trading at 0.6580 on Thursday morning, a few points below this week’s high of 0.6591.
US NFP data ahead
The AUD/USD exchange rate has moved sideways in the past few days as investors wait for the nonfarm payrolls data. Economists expects the data to show that the economy created 110,000 in June after adding 139,000 in May.
The unemployment rate is expected to come in at 4.3%, up from 4.2% in the previous month. Also, these analysts expect the average hourly earnings are expected to come in at 3.9%.
These numbers come a day after ADP published weak jobs numbers. The report showed that the private sector shed 33,000 in June after adding 29,000 jobs in the previous month. It was the first time in two years that the economy shed jobs, and is a sign that Trump’s tariffs are having an impact.
In a note, ADP said that, while layoffs continue to be rare, companies were hesitant to hire and replace departing workers. Some large companies are also cutting jobs, with Microsoft shedding over 9,000 employees, mostly in its Xbox division.
The other top catalyst for the AUD/USD exchange rate will be the upcoming ISM and S&P services PMI numbers. Economists expect the data to show that the ISM non-manufacturing PMI rose from 49.9 in June to 50.5 in July, while the S&P Global figure fell from 53.7 to 53.1.
These numbers will likely influence the Federal Reserve when making its interest rate decision. Signs that the labor market is deteriorating could push it to start cutting rates as soon as in its July meeting.
AUD/USD technical analysis
The 12-hour chart shows that the AUD/USD exchange rate remained in a tight range on Thursday morning. It was trading at 0.6581, higher than last month’s low of 0.6375.
It has moved slightly above the 61.8% Fibonacci Retracement level. Also, the pair remains above the 50-period moving average and is slightly below the upper side of the channel.
Therefore, the pair’s outlook is neutral and could move in either direction. More gains will be confirmed if it rises above the key resistance level at 0.6590. Such a move will have it rise to the next resistance point at 0.6700. The alternative scenario is where it drops to the 50-period moving average at 0.6500.
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Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.