Australian Dollar, AUD/USD, Jobless Claims, NFPs – Asia Pacific Market Open:
- Australian Dollar falls as US jobless claims data briefly jitters markets
- All eyes now turn to US NFPs as cracks slowly emerge in the economy
- AUD/USD eyes an Ascending Triangle chart formation, support in focus
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Asia-Pacific Market Briefing – US Economy Showing Early Cracks Ahead of NFP Data
The Australian Dollar underperformed against its major counterparts on Thursday. The sentiment-linked currency received a boost following the latest round of US initial jobless claims, which surprised higher at 228k compared to the 200k median estimate. However, that outcome turned out to be a decline from the previous period, which was revised higher to 246k.
Meanwhile, a separate report showed that US-based employers reported 89.7k job cuts in March. That was a 15% increase compared to February. The initial reaction to these prints saw US equities weaken and the haven-linked US Dollar strengthens. Combined, this pushed AUD/USD lower. Still, by the end of the Wall Street session, equities reversed losses and finished in the green.
Traders might be looking to a solid non-farm payrolls report for March, which is due later today at 12:30 GMT. However, US markets will be closed for the Good Friday holiday, lowering liquidity and increasing volatility risk to an unexpected outcome. The US economy is seen adding 230k non-farm payrolls as the unemployment rate holds steady at 3.6%.
However, some early cracks are appearing in the economy. The Citi Economic Surprise Index has fallen to its lowest since late February. This is a sign that lately, economic outcomes have been coming in softer than estimated. Meanwhile, a custom momentum indicator I made is at its lowest since the immediate aftermath of the 2020 global pandemic – see the chart below.
With numerous trading exchanges offline until next week, the focus will shift to the currency market reaction to the US jobs report. With fears of a recession growing after US banking system woes, a softer NFP print could induce risk aversion. Traders have lately been focusing on what a dovish Fed could mean for markets, this could quickly switch to panic if economic data starts to quickly turn south. That may bode ill for AUD/USD.
Is the US Economy Slowing?
Australian Dollar Technical Analysis
From a technical standpoint, AUD/USD could be increasingly looking at a bearish setup. An Ascending Triangle seems to be carving out since February. Breaking lower could open the door to extending January’s top. This is as the 50-day Simple Moving Average appears to be holding as key resistance, maintaining the downside bias. Extending losses places the focus on the March low.
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AUD/USD Daily Chart
Chart Created in TradingView
— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com
To contact Daniel, follow him on Twitter:@ddubrovskyFX