Australia's wild jobs report may rattle the Australian dollar

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It was a quiet session for the Australian dollar overnight, gravitating around the 76 cent level for much of US and European trade.

At the close in New York, the AUD/USD finished the session buying .7605, down 0.21% on Tuesday’s closing level.

At one point in early European trade it fell below .7580 — a level that has offered both resistance and support in the past — before jumping back to .7640 then edging lower yet again into the close.

Interestingly, the rebound came despite another enormous 4% plunge in crude oil futures in overnight trade.

AUD/USD Hourly Chart

Turning to Thursday trade in Asia, all attention will be on the release of Australia’s June jobs report, something that will be released at 11.30am AEST.

Ellias Haddad, senior currency strategist at the Commonwealth Bank, expects a soft jobs report, something that he believes will weigh on the Aussie over the course of Asian trade.

“CBA economists expect Australia’s economy to add 5,000 jobs in June due to sample rotation effects. A stable participation rate should see the unemployment rate tick up 0.1% to 5.8%, in line with consensus,” says Haddad.

“Softer Australian employment conditions as we expect can weigh on AUD today because it will reinforce the case for more RBA rate cuts.”

However, Haddad believes that downside in the AUD/USD will be limited, suggesting that there are other factors that will continue to support the Aussie.

“The prospect for more accommodative monetary policy from major central banks is AUD-supportive,” he says, adding that “AUD/USD has important technical support at 0.7550.”

Markets are looking for an increase in employment of 10,000, leaving the unemployment rate fractionally higher at 5.8%.

Outside of the labour market report, markets will also have to digest a speech from RBA head of financial stability, Luci Ellis, at 4.15pm AEST.

Later in the session, the Bank of England monetary policy committee (MPC) will also announce its June rate decision. Following the UK Brexit vote, economists expect the bank to cut rates by 25 basis points to 0.25%.

Expectations range wildly, likely ensuring heightened market volatility, including in the Aussie.

Here’s the Aussie dollar scorecard as at 7.45am AEST.

  • AUD/USD 0.7600 , -0.0005 , -0.07%
  • AUD/JPY 79.37 , -0.09 , -0.11%
  • AUD/CNH 5.0816 , -0.0036 , -0.07%
  • AUD/EUR 0.6851 , -0.0005 , -0.07%
  • AUD/GBP 0.5785 , 0.0001 , 0.02%
  • AUD/NZD 1.0438 , -0.0007 , -0.07%

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