AUD/USD suffers another daily loss but moves off lows
- AUD, worst performer among majors on Thursday.
- AUD/USD recovers on the back of a weak US dollar.
- Data ahead: Australian PPI and NFP.
The Australian dollar fell against its main rivals on Thursday and even lost ground versus the US dollar. The greenback, measured by the US Dollar index, fell to 88.70 and it was about to post the lowest close since 2014.
The AUD/USD pair bottomed during the Asian session at 0.7985 and then started to recover. The up-move continued in NY and recently it reached 0.8034. It is still headed toward a daily loss but it moved far from the lows. The recovery was supported by the decline of the dollar.
“The softer than expected inflation data from Australia earlier this week dampened ideas that the central bank can raise rates in coming months and its interest rate support has been declining”, said analysts from Brown Brothers Harriman. Inflation numbers, an unexpected decline in building permits and monetary policy expectations weight on the Aussie.
On Friday, more inflation data for Australia will be released with the Q4 PPI. It could be an opportunity to offset the negative impact of the latest soft CPI numbers or could add more negative momentum to the Aussie if it comes significantly below expectations.
The key data tomorrow is US official employment report. Non-farm payrolls are executed to show a gain of 180K in January, the unemployment rate to stay at 4.1% and average weekly earnings to rise 0.2%.
Technical outlook
The AUD/USD pair is any way poised to extend its decline, “as in the 4 hours chart, the 20 SMA has turned lower well above the current level, while the Momentum faltered near its mid-line, now resuming its decline well into negative territory, as the RSI consolidates around 44”, says Valeria Bednarik, Chief Analyst at FXStreet.
According to her renewed selling interest below 0.8000 will likely result in a steeper decline, firstly toward 0.7956 (Jan 23 low) en route later to the 0.7920 region.