AUD – Australian dollar
The Australian dollar is trading higher against its US counterpart as markets reacted positively to the much anticipated Jackson Hole speech by Federal Reserve Chairman Jerome Powell. The AUD / USD rate rose from 0.7222 to above 0.7300, hitting an intraday high of 0.7317. In line with the outperformance of commodity currencies, the NZD was also a strong performer, rising from 0.6933 to 0.7019, causing the AUD / NZD to trade in a relatively narrow range between 1.0415 and 1.0445.
With the Australian dollar trading north of 73 cents for the first time since early August and a relatively calm datasheet today, there are a few key releases that could determine the near-term direction. Friday’s non-farm payroll data is being closely watched, especially given Fed Chairman Powell’s admission that the decision on when to start reducing quantitative easing will be based on the strength of the labor market. The market expects 750,000 new jobs and an unemployment rate of 5.2%. Given recent concerns over slowing Chinese growth and the Australian economy’s reliance on China, Chinese PMIs will be of interest to AUD traders who will be interested in seeing the recent delta breakout now under control. On the local front, local Covid-19 case numbers are still being monitored.
From a technical perspective, markets will want to see if AUD / USD can extend gains above resistance levels in the early 0.73s. On the flip side, the supports are significantly lower with first lines at 0.7200, followed by the annual low of 0.7105.
As we mentioned above, Fed Chairman Powell’s speech in the Jackson Hole speech was the most important story that had an impact on prices in the financial markets. There were a few key things to note in the speech that were picked up by the markets that created a higher risk of being hired. First, in Powell’s quotation that “significant progress” has been made on the Fed’s quantitative easing reduction criteria, which supports his view that the slowdown would likely begin later this year when the economy “resumes.” expected ”would develop further. He deliberately insisted that the start of tapering was not a signal of an imminent rate hike, and emphasized the “much more stringent test” required for a rate hike. In addition, he reiterated previous views that the Fed still views current inflationary pressures as mostly temporary and limited to certain sectors.
This cautious sentiment from the Fed chairman was positively received by the markets, with the S&P500 rising nearly 1% to hit a new record high. The safe haven USD was weaker across the board as high beta currencies strengthened. Commodity prices were also buoyed by the news as well as generally rosier outlook for global growth, boosting commodity currencies such as AUD, NZD, NOK and CAD.
AUD / USD: 0.7200-0.7370
AUD / EUR: 0.6140 – 0.6230
GBP / AUD: 1.8750-1.8975
AUD / NZD: 1.0400 – 1.0470
AUD / CAD: 0.9170-0.9275