AUD/USD Supported by Robust Jobs Data, China Rate Cuts

The Australian Dollar is trading better, but off its high on Thursday after getting an earlier lift from a set of robust employment reports that reinforced trader bets on an early rise in interest rates. The news is helping to push short-term bond yields higher, which is underpinning the Aussie.

At 10:23 GMT, the AUD/USD is trading .7240, up 0.0027 or +0.38%. On Wednesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $71.68, up $0.46 or +0.65%.

In domestic economic news, data showed a solid 66,800 rise in jobs in December, pushing the unemployment rate down to its lowest since mid-2008 at 4.2%.

The news drove the market well ahead of the RBA which has insisted that no hike was likely in 2022. The latest data shows financial futures traders are pricing in around a 70% chance of a first rate hike in the 0.1% cash rate by May, with June showing a done deal.

The Aussie’s gains were also driven by the news that China had cut lending rates for corporate and household loans, while lowering a mortgage reference rate for the first time in nearly two years.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7314 will signal a resumption of the uptrend. A move through .7170 will change the main trend to down.

The minor range is .7314 to .7170. The AUD/USD is currently straddling its 50% level at .7242.

The main range is .7556 to .6993. Its retracement zone at .7275 to .7341 is resistance. This zone stopped the buying on January 13 at .7314. It is controlling the near-term direction of the Forex pair.

The short-term range is .6993 to .7314. Its retracement zone at .7153 to .7116 is support.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD into the close on Thursday is likely to be determined by trader reaction to .7242.

Bullish Scenario

A sustained move over .7242 will indicate the presence of buyers. If this move can create enough upside momentum then look for a test of the main 50% level at .7275.

Sellers could come in on the first test of .7275, but overtaking this level could extend the rally into .7314, followed by .7341.

Bearish Scenario

A sustained move under .7242 will indicate the presence of sellers. This could lead to a test of .7213, followed by .7170.

Taking out .7170 will change the main trend to down, but buyers could return if .7153 – .7116 is tested.