- AUD/USD gains strong traction for the second straight day and climbs to a nearly two-week high.
- The uncertainty over the Fed’s rate-hike path weighs on the USD and lends support to the major.
- The mixed US NFP report does little to impress the USD bulls or provide any impetus to the pair.
The AUD/USD pair stands stall near a one-and-half-week high, around the 0.6625-0.6630 region through the early North American session on Friday and moves little in reaction to the mixed US monthly employment details.
The US Dollar (USD) did get a minor lift after the headline NFP print showed that the US economy added 339K new jobs in May, smashing consensus estimates by a big margin. Adding to this, the previous month’s reading was also revised higher. That said, the uncertainty over the Federal Reserve’s (Fed) next policy moves keeps a lid on any further gains for the Greenback and remains supportive of the strong bid tone surrounding the AUD/USD pair for the second successive day.
It is worth recalling that the markets have been pricing in the possibility of another 25 bps lift-off at the next FOMC meeting on June 13-14. A slew of influential Fed officials this week, however, backed the case for skipping an interest rate hike. Apart from this, the risk-on impulse – led by the optimism over the passage of legislation to lift the government’s $31.4 trillion debt ceiling and avert an unprecedented American default – undermines the USD and benefits the risk-sensitive Aussie.
The Australian Dollar (AUD) further draws support from hopes of a recovery in the world’s second-largest economy, bolstered by a private survey on Thursday that showed China’s manufacturing sector unexpectedly registered modest growth in May. This, along with speculations that the Reserve Bank of Australia (RBA) could tighten its monetary policy further, favours the AUD/USD bulls and suggests that the path of least resistance for spot prices is to the upside.
Technical levels to watch
