The Australian dollar drifts higher ahead of the US jobs report

Sergio Camacho/Getty Images
  • The Australian dollar drifted higher in quiet trade on Thursday.
  • Firm commodity prices and ongoing optimism over US-Sino trade negotiations worked in the Aussie’s favour.
  • US non-farm payrolls for March will be released today.

The Australian dollar drifted higher in quiet trade on Thursday, continuing to be supported by optimism over a possible trade breakthrough between the United States and China.

Here’s the scoreboard at 8am in Sydney on Friday.

AUD/USD 0.7111 , -0.0001 , -0.01%
AUD/JPY 79.38 , 0.10 , 0.13%
AUD/CNH 4.7754 , 0.0009 , 0.02%
AUD/EUR 0.6337 , 0.0007 , 0.11%
AUD/GBP 0.5438 , 0.0035 , 0.65%
AUD/NZD 1.0525 , 0.0037 , 0.35%
AUD/CAD 0.9503 , 0.0012 , 0.13%

With little economic data to focus on, the AUD/USD traded between .7098 and .7127, consolidating upon the strong gains achieved on Wednesday.

Reports that US President Donald Trump and China’s Vice President Liu He will meet late on Thursday was one factor that helped to support the Aussie during the session.

“Beijing has acknowledged the issues the US has regarding intellectual property theft, forced technology transfer and cyber hacking. This acknowledgement was welcomed by the markets,” said strategists at ANZ Bank.

“Also supportive was Trump’s assertion that ‘China will be buying a lot of product from the US’.”

While trade optimism continued to underpin the Aussie, along with recent gains in commodity prices, especially iron ore, the lack of movement during the session was likely impacted by caution ahead of the release of US non-farm payrolls on Friday.

Investing.comAUD/USD Hourly Chart

Although the Aussie moved little against the greenback, it recorded larger gains against the British pound and New Zealand dollar during the session.

The pound was weighed down by continued uncertainty over when and what form the UK will leave the European Union.

“Reports suggest the UK and EU are thinking in terms of a nine-month extension to Article 50, to be agreed at next Wednesday’s EU Summit,” said Ray Attrill, Head of FX Strategy at the National Australia Bank.

As for the Kiwi dollar, some strategists put the move down to divergent moves in Australia’s and New Zealand’s key commodity export prices, along with optimism over a potential trade deal between the US and China.

“The ongoing rises in the iron ore price and the consolidation of milk prices are supporting AUD/NZD,” said Joseph Capurso, Senior Currency Strategist at the Commonwealth Bank.

“Any positive news about a trade deal between the US and China should support AUD/NZD further because of Australia’s heighten exposure to Chinese domestic demand.”

Turning to the day ahead, the US payrolls report for March will dominate proceedings in the second half of the session. Markets are looking for payrolls to lift by 180,000, accelerating from the 20,000 increase reported in February. The unemployment rate is expected to remain steady at 3.8% with average hourly earning tipped to rise by 0.3%, leaving the annual increase unchanged at 3.4%.

Before that event arrives, markets will also receive the latest Performance of Construction Index (PCI) from Australia, household spending and labour cost earnings from Japan, German industrial output along with trade figures from France.

Canada’s jobs report will also arrive at the same time the US payrolls report is released.

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