The Australian dollar is looking 'vulnerable'

Photo by Chris McGrath/Getty Images

The Australian dollar remains under pressure, opening the new trading week just above the US 75 cent level.

Here’s the scoreboard as at 7.55am AEDT.

AUD/USD 0.7507 , 0.0003 , 0.04%
AUD/JPY 85.22 , 0.03 , 0.04%
AUD/CNH 4.9705 , -0.0016 , -0.03%
AUD/EUR 0.6380 , 0.0001 , 0.02%
AUD/GBP 0.5607 , 0.0002 , 0.04%
AUD/NZD 1.0962 , 0.0011 , 0.10%
AUD/CAD 0.9649 , 0.0006 , 0.06%

At .7507 the AUD/USD remains near a six-month low, failing to benefit from a rebound in commodity prices on Friday following the release of a strong Chinese trade report for November.

“Oil prices led the gains in commodities supported by china‚Äôs trade data revealing a decent rise in oil imports during November,” said Rodrigo Catril, currency strategist at the National Australia Bank.

“The risk on theme for the day was also helped commodities perform, after a volatile couple of days, with copper up 0.5% and iron ore 1.6%.”

Despite the strength in commodity prices, Catril said the Aussie was yet again undermined by a bout of US dollar strength, this time following the release of a mixed US non-farm payrolls report for November.

“Non-farm payrolls beat expectations — 228,000 versus 195,000 expected — with the job gains keeping the unemployment rate at a 17-year low of 4.1%,” Catril says.”But average hourly earnings disappointed at 0.2% versus expectations for 0.3% rise. So despite all the job creation, the year-on-year wage growth declined to 2.5% from 2.7% in the previous month.”

Despite the disappointing hourly earnings print — again raising questions as to whether US inflation pressures will build next year — the US dollar rallied after initially falling on the jobs report, ensuring that the Aussie finished the week near the lowest level in six months.

“After an initial wobble on the headlines, the USD managed to end Friday stronger with both DXY and BBDXY recording a fifth consecutive day of gains,” Catril says.

“AUD ended Friday almost unchanged, but looking at the chart the currency remains vulnerable to the downside. The soft weekly close — down 1.4% – has left the AUD vulnerable to the downside with key support level at 0.7490 now well within sight.”

AUD/USD Daily Chart

Looking to the session ahead, there’s nothing on the calendar in Asia that appears likely to generate any significant volatility across markets, including the Australian dollar.

There’s also very little on the radar in Europe and North America with JOLTS job openings in the US the underwhelming headline act.

Given the quiet data calendar, and a slew of major central bank and data releases scheduled later in the week, it promises to be a quiet start to the week, at least on the surface.

For the Aussie, a combination of sentiment, technicals and positioning, along with the movements in Chinese commodity futures and the Japanese yen, will likely dictate what direction it travels in today.

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