AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Ripe for Another Plunge if Jobs Data Disappoints

The Australian and New Zealand Dollars are trading mixed shortly before the release of key Australian Employment data as traders continue to digest the impact of the Fed meeting minutes dropped late Wednesday.

At 01:00, the AUD/USD is trading .6943, down 0.0065 or -0.09% and the NZD/USD is at .6821, down 0.0002 or -0.03%. The Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $68.71, down $0.84 or -1.21%.

Fed Minutes Less-Hawkish than Expected

The Fed minutes showed that the Federal Reserve would continue its aggressive hiking campaign until it can tame inflation. This was the hawkish news.

At the same time, Fed policymakers also indicated that it could soon slow the pace of its tightening, while also acknowledging certain weakness in parts of the economy and risk to the downside for GDP growth. This dampened the Fed’s hawkish tone.

Traders Disappointed by Wage Gap

Australia’s wages rose at their fastest rate in almost eight years but still less than half the headline inflation rate, a record gap likely to fuel calls at next month’s jobs summit for more steps to halt the decline in real household incomes. The news helped trigger a plunge in the AUD/USD on Wednesday.

The wage price index rose 0.7% in the June quarter and 2.6% annually, seasonally adjusted, the Australian Bureau of Statistics reported on Wednesday.

Economists had predicted the WPI would rise about 2.7% on an annual basis and 0.8% in the three months to the end of June. In the March quarter WPI was 2.4%.

Prices fell sharply because real wages are dropping at a rate not seen in at least a quarter of a century.

Daily Forecast

Traders are hoping the employment numbers beat the estimates following Wednesday’s steep sell-off. The Aussie is on track to post its biggest weekly decline since January, and a weaker-than-expected jobs report could easily spike it towards its worst week in year.

The Employment Change and Unemployment reports are expected to show the unemployment rate holding steady at 3.5% and a ninth straight month of job creation. Traders estimate the economy added about 26.5K new jobs in July versus 88.4K in June.

Technically speaking, holding .6909 will indicate the presence of buyers, while recapturing .6983 will be a sign of strength.

Prices could weaken under .6909, but a move through .6855 could trigger an acceleration to the downside.