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Remains Below Resistance


FED Reverse Repo Operation

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A strong labour force report released out of Australia supported the local currency on Thursday, as employment growth comfortably beat expectations, driving the unemployment rate to new multi-decade lows. The data prompted participants to add hawkish RBA bets, with some revising their forecasts for the August rate review to 75bp.

  • While the Aussie remained one of the best G10 performers through the rest of the day, demand for the greenback drove AUD/USD into negative territory, as Fed hawks were circling. The NY session brought some reprieve, as Fed's Waller & Bullard backed a 75bp move at the next FOMC meeting, with AUD/USD finishing just 10 pips shy of neutral levels.
  • A softer commodity complex may have helped prevent the Aussie from holding the lead. Bloomberg Commodity Index dropped to a weekly low, with iron ore suffering severe losses amid reports of a growing number of Chinese home-buyers refusing to pay mortgages on unfinished properties.
  • The broader risk backdrop was also questionable, even as U.S. equity benchmarks trimmed losses, with the NASDAQ finishing virtually unchanged.
  • Spot AUD/USD trades flat at $0.6748. Bears look for losses past yesterday's low of $0.6682, before setting their sights on the 0.764 proj of the Apr 5 - May 12 - Jun 3 price swing at $0.6647. Bulls would be pleased by a rebound above Jun 28 high of $0.6964.
  • The RBA will publish the minutes from its July monetary policy meeting next Tuesday, with NAB Business Confidence coming up Thursday.
  • In the meantime, Chinese activity data are set to grab attention in Sydney hours today.

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