Why the AUDUSD will look through a soft jobs print on Thursday

In an almost carbon copy of Tuesday last week, traders in Asia this morning have tuned in to find that a second pharmaceutical company, Moderna overnight reported impressive results for their COVID19 vaccine trials.

Charts (1)

The news from Moderna further bolstering sentiment after the weekend signing of the largest trade deal in history between 15 Asian Pacific countries including China, Japan, South Korea, and Australia.

While it is doubtful the agreement will ease strained Australia and China tensions, it does provide a pathway for Australia to reduce its trade reliance on China. In response and also buoyed by a weaker U.S dollar, the AUDUSD has been able to cement its first daily close above .7300c for two months.

Further gains in the AUDUSD are likely to depend on the outcome of Thursday's labour force report for October. As confirmed by this morning’s RBA minutes and Governor Lowe's speech last night, the labour market is very much at the centre of the RBA’s monetary policy setting.

Thursday's labour force report is expected to show a 30k drop in jobs and the unemployment rate to rise to 7.2% from 6.9% in September. However, any weakness in the AUDUSD caused by a soft number is likely to be temporary as the market then looks towards a stronger employment number in November, following the easing of lockdown restrictions in Victoria.

Technically the AUDUSD is at an interesting juncture sitting just below resistance .7340/50ish, coming from a trendline drawn from the .8135 high of January 2018, and above an important layer of support, formerly resistance .7220/00c mentioned in our last article on the AUDUSD here

Keeping in mind a break/close above .7200c would be initial confirmation the uptrend has resumed.”

A sustained break above the downtrend resistance .7340/50ish, ideally after Thursday's jobs data would reignite the positive momentum in the AUDUSD and with it expectations of a retest of the September .7414 high, before .7500c.

Aware that a failure break/close above .7340/50, followed by the loss of near-term support .7220/00 would warn that a deeper pullback towards range lows at .7000c is underway.

Why the AUDUSD will look through a soft jobs print on Thursday

Source Tradingview. The figures stated areas of the 17th of November 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.