The Australian dollar is in the 'death zone'

Photo: Mike Powell /Allsport.

The Australian dollar is attempting to push clear of 77 US cents this morning, entering a “death zone” of sorts that it’s struggled to overcome in the past.

However, with the rally overnight, the AUD/USD currently sits at the highest level since November 10 last year.

Here’s the Aussie dollar scoreboard as at 7.45am AEDT:

  • AUD/USD 0.7714 , 0.0054 , 0.70%
  • AUD/JPY 88.02 , 0.50 , 0.57%
  • AUD/CNH 5.2780 , 0.0261 , 0.50%
  • AUD/EUR 0.7275 , 0.0034 , 0.47%
  • AUD/GBP 0.6191 , 0.0049 , 0.80%
  • AUD/NZD 1.0683 , 0 , 0.00%

Making the Aussie move all the more impressive, it came despite a raft of strong US economic data, a lift in US bond yields and building expectations that the US Federal Reserve may lift interest rates as soon as next month.

That would normally be enough to put a rocket under the greenback. Instead, the Aussie seemed to benefit from improved sentiment towards the outlook for the global economy, providing it with the impetus to have a crack at resistance layered above 77 cents.

As the daily chart shows below, the AUD/USD hasn’t had the best track record above .7700 in recent years. The recent trend is whenever it manages to climb above this level, the rally gets starved of oxygen.

AUD/USD Daily Chart

With the Aussie now in a precarious position, whether or not it manages to break convincingly above 77 cents will almost certainly be determined by the release of Australia’s January jobs report at 11.30am AEDT.

Markets expect employment to increase by 10,000, with the unemployment rate tipped to remain steady at 5.8%. With many alternate labour market indicators hitting multi-year highs in the past month, if there’s any risks today, it’s seemingly to the upside.

For those looking for further information before the report hits, this 10-second guide will bring you up to speed.

Outside of Australia’s jobs report, there’s next to nothing on the economic calendar in Asia, likely ensuring that movements in the USD/JPY and USD/CNY will continue to be influential over broader currency markets.

Like Asia, there’s little in the way of market moving events scheduled in Europe, although there’s enough to keep traders interested later in the session.

In the US, housing starts and building permits for January, weekly jobless claims and the Philadelphia Fed manufacturing index for February are all scheduled for release.

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