The Australian dollar is under pressure ahead of today’s key US jobs report

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  • Falling commodity prices and US dollar strength weighed on the Australian dollar on Thursday.
  • Strength in the US dollar was driven by a slide in the euro following the ECB’s interest rate decision.
  • Highlights today include the Bank of Japan’s monetary policy decision and US non-farm payrolls, especially the hourly earnings figure.

The Australian dollar is trading weaker, pulled lower on Thursday by a stronger US dollar and steep declines in commodity prices.

Here’s the scoreboard as at 8.05am AEDT.

AUD/USD 0.7789 , -0.0034 , -0.43%
AUD/JPY 82.77 , -0.21 , -0.25%
AUD/CNH 4.9396 , -0.0042 , -0.08%
AUD/EUR 0.6326 , 0.0023 , 0.36%
AUD/GBP 0.5638 , 0.001 , 0.18%
AUD/NZD 1.0721 , -0.0016 , -0.15%
AUD/CAD 1.0044 , -0.0052 , -0.52%

Along with large declines across base and bulk commodity prices, along with crude oil, the Aussie was also weighed down by another burst of US dollar strength.

Ray Attrill, Head of FX Strategy at the National Australia Bank, said the latter was largely a byproduct of weakness in the euro following the ECB’s March monetary policy meeting.

“The ECB, as expected, tweaked their policy guidance to drop the so called easing bias, meaning a willingness to increase the size and duration of the QE asset buying programme if necessary. But there was no guidance as to when the purchase programme would end or when rates might start to rise,” he says.

“In itself this was not market moving, but Mario Draghi succeeded in talking the Euro — and Eurozone bond yields — down in his ensuing press conference.”

The euro fell over a cent against the greenback during Draghi’s press conference, pushing the US dollar higher against all majors except the Canadian dollar.

That largely explains why the AUD/USD currently sits at .7789.

AUD/USD Hourly Chart

Turning to the day ahead, talk of Trump, trade wars and tariffs will take a backseat — at least temporarily — with a couple of big events scheduled during the session.

The first comes from the Bank of Japan (BoJ) with the release of its March monetary policy decision.

While no one expects policy to change at this meeting, given increased speculation that the bank may reduce monetary stimulus later this year, there’ll be plenty of attention on BoJ Governor Kuroda’s press conference following the policy decision.

There’s no set time for the actual policy announcement, but it likely arrive at some point after 2pm AEDT if history is any guide.

Coming before the BoJ decision, China will also release consumer and producer price inflation figures for February at 12.30pm AEDT. This release has lost its market-moving clout in recent years, so little excitement is expected.

The other big event for the session will come from the release of US non-farm payrolls for February at 12.30am AEDT.

“Payroll growth is seen at 200,000, the unemployment rate down 0.1% to 4.0% and, more important than either, average hourly earnings is seen rising 0.2%, leaving the annual rate at 2.8% from 2.9% in January,” Attrill at the NAB says.

“The latter implies that last month’s lift in annual growth to 2.9% from 2.7% was partly an aberration [due to adverse weather conditions].”

Attrill says that if earnings rise by 0.3% or more, it will bolster the view that the US Fed will lift rates more this year than markets currently expect.

Other data highlights for the session include Canadian unemployment, German trade and UK industrial output.