AUDUSD Forecast – Edges Lower as Strong US Jobs Data Puts Aggressive Fed Rate Hike Back on Table

The Australian Dollar retreated on Friday, but closed well off its low as investors took profits from earlier gains after U.S. jobs data and wage inflation were surprisingly strong in November, creating uncertainty as to how hawkish the U.S. central bank will be at its Dec. 13-14 monetary policy meeting. The indecision comes after several Fed officials including Chairman Jerome Powell said earlier in the week that rate hikes are likely to slow.

On Friday, the AUDUSD settled at .6795, down 0.0017 or -0.24%. This was up from a low of .6743. The Invesco CurrencyShares Australian Dollar Trust ETF (FXA) finished at $67.35, down $0.05 or -0.08%.

The price action suggests some Aussie investors feel the report has bought the Fed more time to stay aggressive with a 75-basis point rate hike at the December meeting instead of the currently predicted 50-basis point rate rise.

US Employers Add More Workers than Expected, Wages Jump

U.S. employment data released on Friday showed that employers added 263,000 jobs in November, well above estimates of 200,000. Average hourly earnings increased by 0.6% in the month, above expectations for a 0.3% gain. In other news, the participation rate declined to 62.1%. All of these figures indicate tightness in the labor market.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6843 will signal a resumption of the uptrend. A move through .6641 will change the main trend to down.

The nearest support is a long-term 50% level at .6760. This is followed by a short-term Fibonacci level at .6631. On the upside, the nearest target is the Sept. 13 main top at .6916.

Daily Swing Chart Technical Forecast

Trader reaction to .6789 is likely to determine the direction of the AUDUSD early Monday.

Bullish Scenario

A sustained move over .6789 will indicate the presence of buyers. This could lead to a quick test of the minor top at .6843. Taking out this level could trigger an acceleration into .6916.

Bearish Scenario

A sustained move under .6789 will signal the presence of sellers. This could drive the market into the major support at .6760. This price is a potential trigger point for an acceleration into the next major support at .6631.

Side Notes

Expect heightened volatility early Monday as traders continue to digest the U.S. Non-Farm Payrolls report. Fueling the volatility will be uncertainty over whether the Federal Reserve raises rates 50 or 75 basis point at its December meeting.