- AUD / USD is currently trading at 0.7194 and around daily highs so far.
- The US dollar bleeds in the closing hours of the New York session as traders begin to focus on the Jackson Hole.
AUD / USD has traded in a range of 0.7150 to 0.7196, up 0.47% at time of writing, while DXY is trading 1 pip above the 93 figure.
Meanwhile, less optimism has been reflected across Australia of late as markets have started to doubt the reflation story after a spate of grim national inquiries.
Overnight, the latest survey showed salaried jobs fell 0.8% in the fortnight ending Aug 8 and jobs are now down 4.9% since w / e 14 March.
This is the weakest they have been since early June. Total wage wages are down 6.2% since mid-March, deteriorating from −1.7% at the start of July.
The Australian Bureau of Statistics noted that “some of the initial impacts” of the Stage 4 restrictions in Melbourne and Stage 3 in the Victoria region have been captured, but it is likely that the impact will be greater and more clearly in the coming weeks.
However, it’s not just Victoria where the weakness shows itself.
Analysts at ANZ Bank explained that the recovery in employment elsewhere in the country also appears to be stagnating, particularly in New South Wales and ACT.
We expect an outright drop in employment in August-September.
While the focus is still on the weakening economic climate, the fact that the AUD has been seen as the most overvalued currency among the G10 procyclicals, the AUD will be vulnerable if markets start to anticipate. a market recovery.
Still, with the greenback under scrutiny, the bearish sentiment in the USD will potentially lend a lifeline to the AUD / USD bulls.
The Jackson Hole this week is critical
In view of persistent inflation, the Federal Reserve is expected to indicate that rates could be lower for longer at a symposium on the theme and titled “Navigating the Decade to Come: Implications for Monetary Policy”.
The opening speech by Fed Chairman Powell will be the focal point on which he is expected to offer more information on the Fed’s monetary policy review and expected average inflation targeting.
This could help prop up the greenback’s downside argument and simultaneously support US equity markets (correlated AUD) until the next FOMC meeting on September 15-16.