USD Weakens From The Rise Of The US Unemployment Rate

Jul 05 21, 10:45 GMT

The greenback weakened on Friday and stabilised somewhat during the Asian session today, as the US employment report for June tended to disappoint traders, as the NFP figure rose but the unemployment rate rose as well, while trader’s attention turns to the release of the Fed’s latest meeting minutes. The Aussie after the recent strengthening seems to turn its attention to the release of RBA’s interest rate decision tomorrow, as the bank on the one hand is expected to remain on hold, yet may signal a change in regards of its QE program. The GBP gained against the USD, despite BoE Governor Bailey’s dovish comments, as the Governor highlighted the importance of not prematurely tightening the bank’s monetary policy. Gold rose benefitting from the USD weakness caused by the US employment report for June on Friday and entered the green territory for a third consecutive day. US stocks on Friday were supported reaching new record high levels as all three main US stock indexes were in the greens, encouraged from the prospect of the monetary policy tightening being delayed. Oil prices fell below $75 per barrel on Monday, as there seems to be a deadlock among OPEC+ members and some key players seem willing to increase production levels, in order to protect their market share.

AUD/USD benefitted from USD’s weakening on Friday yet seems to have reached a ceiling at the 0.7530 (R1) resistance line. We tend to maintain a bias for a sideways motion around the 0.7530 (R1) resistance line given also that the RSI indicator below our 4-hour chart is at the reading of 50. Should the bulls take over we may see the pair breaking the 0.7530 (R1) resistance line which was tested yesterday but also on the 21st of June and aim for the 0.7595 (R2) level. Should the bears prevail, we may see AUD/USD breaking the 0.7465 (S1) support line and start aiming for lower grounds, which could signal a return to low levels not seen for the pair since the early days of December last year.

On the other hand, the Japanese currency also tended to benefit from USD’s weakening as USD/JPY dropped, testing yet not breaking the 110.90 (S1) support line. Given the pair’s relative stabilisation during today’s Asian session, we tend to keep a bias for a sideways motion currently, in anticipation for the direction of the pair’s next leg. Should buyers be in control of the pair’s direction, we may see it breaking the 111.70 (R1) resistance line and aim for the 112.25 (R2) resistance level. Should the market display a selling interest for the pair, we may see it breaking the 110.90 (S1) support line and aim for the 109.95 (S2) support level which was tested on the 16th and 21st of June.

Other economic highlights today and the following Asian session:

Today among others we note Turkey’s CPI rates for June and UK’s and France’s final services PMI for June as well as the final composite PMI figure for the Eurozone of the same month. Please note that ECB Vice President De Guindos is scheduled to speak. During tomorrow’s late Asian session we get from Australia, RBA’s interest rate decision.

As for the rest of the week

On Tuesday, we note Germany’s industrial orders for May, Germany’s ZEW indicators for July and the US Markit and ISM services PMIs for June. On Wednesday, we get Germany’s industrial output for May, UK’s Halifax House prices for June and Norway’s GDP rates for May, while the Fed releases the minutes of its latest meeting. On Thursday, we get Japan’s current account balance for May and the weekly US initial jobless claims figure. On Friday, we highlight China’s inflation measures for June, UK’s GDP rates for May, Norway’s CPI rates for June and Canada’s employment data for June.

AUD/USD H4 Chart