- US dollar holds onto sharp losses after NFP.
- AUD/USD reverses sharply and turns positive for the week.
The AUD/USD continued to rise during the American session and printed a fresh daily high at 0.7740. After making a sharp rebound of 70 pips from the lows, it remains near the top and erasing most of Thursday’s losses.
The rally in AUD/USD was triggered by a decline of the US dollar across the board, following the release of the US employment report. Payrolls rose by 559K in May, below expectations and against the odds of a positive surprise that arise after employment indicators released on Thursday.
“May’s jobs report confirmed that the biggest challenge to the labor market’s recovery right now is labor itself. Hiring picked up in May with employers adding 559K new jobs, but like April’s report, that fell short of expectations”, explained analysts at Wells Fargo. They point out that with jobs still 7.6 million short of pre-pandemic highs, “substantial further progress” on the labor market still appears to be a ways off in the eyes of the Federal Reserve.
The improvement in risk sentiment and the decline in US bond yields supported the AUD/USD. With today’s rally, the pair erased weekly losses and recovered back above the 0.7700 key support area. The next resistance on the upside emerges at 0.7750/60 (downtrend line); a break higher should strengthen the outlook for the aussie.
