While most other major currencies continue to push higher against the greenback, the Australian dollar is getting left behind.
It’s fallen across the board again on Thursday, as seen in the scoreboard below as at 7.30am AEDT.
AUD/USD 0.8039 , -0.0015 , -0.19%
AUD/JPY 87.91 , -0.03 , -0.03%
AUD/CNH 5.0560 , -0.0162 , -0.32%
AUD/EUR 0.6424 , -0.006 , -0.93%
AUD/GBP 0.5635 , -0.0039 , -0.69%
AUD/NZD 1.0871 , -0.0062 , -0.57%
AUD/CAD 0.9864 , -0.0052 , -0.52%
The Aussie has been the clear underachiever in recent days, briefly falling below the 80 US cent level on Thursday before bouncing in recent trade.
The AUD/USD Hourly Chart below tells the tale of the tape.
While other major currencies have continued to advance against the greenback, Greg McKenna, Chief Market Strategist at AxiTrader, says the Aussie has been undermined by still-weak inflationary pressures in Australia along with broader sentiment towards the outlook for the Australian economy.
“The Aussie’s troubles stem both from the mildly weaker than expected Q4 CPI report but also from a large cabal of traders and investors who see it at lofty levels at or above 80 cents given their outlook for the economy,” he says.
And while others think the Aussie is looking toppy at current levels, McKenna shares a different view.
“My sense though is the Aussie has every reason to be up at these levels with solid and synchronised global growth, a weak US dollar, and strong commodity prices,” he says, adding that “interest rate differentials are the only real drag on the Aussie”.
Turning to the session ahead, it will be about one thing and one thing only — the US non-farm payrolls report for January.
Payrolls are forecast to increase by 180,000, leaving the unemployment rate steady at 4.1%. Average hourly earnings are expected to increase by 0.3%, seeing the increase over the year accelerate to 2.6% from 2.5% in December.
With strong payrolls growth now taken as a given, the most crucial part of today’s report will be the wage figure given its links to inflationary pressures. Measures on labour market slack such as underemployment and unemployment — lead indicators on wage pressures — will also be eyed closely.
Aside from the payrolls report, markets will also receive the Empire State Manufacturing Index, factory orders and the final reading of the University of Michigan consumer sentiment index for January in the United states.