AUD/USD and NZD/USD Fundamental Daily Forecast – Mixed Trade on Low Volume, U.S. Bank Holiday

The Australian and New Zealand Dollars are trading mixed early Monday. Volume is light due to bank holidays in Japan and the United States. There are no major reports until Wednesday when the Federal Reserve releases the minutes from its last meeting.

Investors may be digesting Friday’s mixed U.S. Non-Farm Payrolls report but there is also an aura of tension in the air due to renewed focus on geopolitical risks amid concerns that North Korea may be preparing another missile test.

As reported by Russia’s RIA news agency on Friday, North Korea is preparing to test a long-range missile, which it believes can reach the west coast of the United States. The renewed focus on geopolitical tensions is driving investors out of higher-yielding assets and into the safe haven Japanese Yen and gold.

To recap Friday’s events, a Labor Department report showed nonfarm payrolls fell by 33,000 jobs last month amid a record drop in employment in the leisure and hospitality sector. But the unemployment rate fell to 4.2 percent, the lowest since February 2001.

On an annualized basis, average hourly earnings rose to 2.9%. In September they increased 12 cents, or 0.5 percent. The figures for August were revised 0.2 percent.

Economists had forecast a gain of 90,000 jobs in September. The unemployment rate was estimated at 4.4%. Month over month average hourly earnings were forecast at 0.3% and year over year hourly earnings were estimated at 2.5%.

The wage data from the jobs report was seen as a sign of potentially improving inflation which bolstered expectations for the Federal Reserve to raise interest rates again in December.

Forecast

The AUD/USD trend is down and the Forex pair is likely to remain under pressure as long at .7782 remains resistance. Although there may be periodic short-covering rallies over the near-term, the daily chart suggests .7571 is a reasonable price target.

The NZD/USD trend is also down. Late last week, it closed on the weak side of a major technical retracement area. Look for weakness on a sustained move under .7100. The daily chart also indicates there is plenty of room to the downside with the next major target coming in at .6817.