wo economic reports in the space of a few hours should play a large part in the short term direction for the Australian dollar; Australian unemployment and Chinese trade data.
The AUD/USD took a knock last week from strong US employment data boosting the US dollar and a dovish Reserve Bank of Australia causing a wave of selling in the Aussie.
Jawboning the currency lower is nothing new for the RBA so if more jobs are created domestically and the potential for mineral exports increases with better data from a newly government-stimulated China; there is a possibility for a turnaround.
Late Wednesday, the Australian Bureau of statistics releases its monthly employment report. Expectations are for an increase in 12.3K jobs with the unemployment rate ticking higher one tenth to 5.9%. If there is a net gain in jobs created this would boost Australian consumers who lost a lot of confidence after the recent austere national budget. More employed and confident consumers could aid the Australian economy and pressure the RBA to raise interest rates to combat inflation.
Early Thursday, China’s trade surplus is expected to improve to $37.3bn. A large chunk of Australia’s GDP growth comes from its exports to China. If Chinese imports recover from last month’s unexpected drop, it would be a sign of increased Chinese domestic demand for the likes of Australian metal and minerals.
Rising Australian employment and the potential for an increase in commodity exports to China would add to inflationary pressures and increase the likelihood of an RBA rate hike and could see AUD/USD target the prior high at 0.95. A break of 0.95 could set AUD/USD on the road to parity.
The chart below shows AUD/USD stuck between 0.92 and 0.95, an RSI positive reversal (where RSI has made a new low but price has made a higher low) could support a move back to 0.95.
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