The Australian dollar has edged higher on Monday, as the pair trades at 0.7360 line early in the North American session. On the release front, Australian Inflation Gauge declined 0.2%, while ANZ Job Advertisements posted a gain of 2.4%. Early Wednesday, the RBA will release its interest rate announcement. In the US, there are no major releases on the schedule. Fed chair Janet Yellen will deliver remarks at an event in Philadelphia.
Will the RBA lower rates at the upcoming policy meeting? The markets don’t think so, as rates are expected to remain steady at 1.75%. The RBA lowered rates in May by a quarter point, from 2.00% to 1.75%. Although inflation remains low and the RBA has sent clear messages to the markets that it expects to lower rates. However, there are two factors mitigating against a June move. First, a national election has been called for July 2, and the RBA will likely want to avoid any major moves during an election campaign. As well, a strong GDP report for the first quarter gives the RBA some breathing room. GDP expanded 1.1%, well above the estimate of 0.6%. The strong reading was credited to a strong increase in exports to China and higher consumer spending. This marked the strongest GDP report since 2014.
The US dollar was broadly lower on Friday, courtesy of a dismal Nonfarm Payrolls report. The April release fell to just 38 thousand, stunning the markets. Analysts could be forgiven for rubbing their eyes in disbelief at this figure, which was the lowest reading since August 2010. The estimate stood at 159 thousand, which was almost identical to the previous release. The Aussie jumped on the bandwagon, climbing 130 points on Friday and hitting a 3-week high. This NFP report could have significant ramifications, and could mean that a June rate hike by the Federal Reserve is no longer on the table. Some of the plunge in the NFP release is attributable to a strike by workers at Verizon Communications Inc (NYSE:VZ), a major communications company. Still, even without this component, the indicator would have posted a gain of only 72,000, well short of expectations. In other US employment news, Average Hourly Earnings, which measures wage growth, posted a weak gain of 0.2%. The unemployment rate fell to 4.7%, but workforce participation dropped to 62.6%.
AUD/USD Fundamentals
Sunday (June 5)
- 21:00 Australian Inflation Gauge. Actual -0.2%
- 21:30 Australian ANZ Job Advertisements. Actual 2.4%
Monday (June 6)
- 10:00 US Labor Market Conditions Index
- 12:30 US Fed Chair Janet Yellen Speaks
- 19:30 Australian AIG Construction Index
Upcoming Key Events
Tuesday (June 7)
- 00:30 Australian Cash Rate. Estimate 1.75%
- 00:30 Australian RBA Rate Statement
*Key releases are highlighted in bold
*All release times are EDT
AUD/USD for Monday, June 6, 2016
AUD/USD June 6 at 8:50 EDT
Open: 0.7343 Low: 0.7314 High: 0.7371 Close: 0.7361
AUD/USD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 0.7160 | 0.7251 | 0.7339 | 0.7472 | 0.7612 | 0.7739 |
- AUD/USD posted small losses in the the Asian session but recovered in European trade
- 0.7339 was tested earlier in support and could break in the North American session
- 0.7472 is a strong resistance line
- Current range: 0.7339 to 0.7472
Further levels in both directions:
- Below: 0.7339, 0.7251 and 0.7160
- Above: 0.7472, 0.7612 and 0.7339
OANDA’s Open Positions Ratio
AUD/USD ratio is showing long positions with a strong majority (62%), indicative of trader bias towards AUD/USD continuing to move higher.