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The Australian and New Zealand Dollars are trading lower shortly before the release of the U.S. Non-Farm Payrolls report, but both currencies have clawed back more than half of their earlier losses. The move is likely being fueled by short-covering and position-squaring ahead of the jobs report.
At 1049 GMT, the AUD/USD is trading .7364, down 0.0001 or -0.01% and the NZD/USD is trading .6734, down 0.0005 or -0.08%.
U.S. Treasury instruments are trading higher Friday morning, which means yields are weakening, as investors looked ahead to a slew of key economic data.
The yield on the benchmark 10-year Treasury note was lower at around 2.9804 percent, while the yield on the 30-year Treasury bond was also lower at 3.1135 percent.
Investors will get the opportunity to react to economic data due Friday including non-farm payrolls, unemployment rate and average hourly wages data for July, which are all set to be released at 1330 GMT. The jobs report is widely expected to give a reading on the health of the world’s largest economy and offer possible clues regarding the pace of the Federal Reserve’s future interest rate hikes.
The Non-Farm Employment Change is expected to show the economy gained 191K jobs in July, down from 213K in June. The Unemployment Rate is expected to drop to 3.9% from 4.0% and Average Hourly Earnings are expected to rise 0.3%, up from 0.2%.
The U.S. Trade Balance is expected to increase to -46.5 billion, up from -43.18 billion. Final Services PMI is expected to remain unchanged at 56.2. At 1400 GMT, ISM Non-Manufacturing PMI is expected to decline from 59.1 to 58.6.
Technically, the AUD/USD main trend is up, but momentum is down. Today’s early price action indicates the Forex pair may be trying to form a potentially bullish closing price reversal bottom. This makes yesterday’s close at .7364 an important to level to watch all session.
If the selling pressure persists then .7318 will become the primary downside target. On the upside, resistance is lined up at .7392 and .7397.
The NZD/USD main trend is also up. A trade through .6713 will turn the main trend to down with .6688 the next likely target. The key intraday level to watch today is .6741. Closing over this level will form a reversal on the daily chart, which could trigger a short-term short-covering rally.
Aussie and Kiwi traders should also watch for any news regarding the trade dispute between the U.S. and China. Especially any retaliation from China in response to the Trump Administration’s newly proposed tariffs on the Asian economy.