AUD/USD seeks to maintain gains after rosy US session as NFPs nears

Friday’s Asia-Pacific outlook

The risk-sensitive Australian dollar put in a solid rally versus the US dollar overnight as risk appetite returned to US markets. Stocks on Wall Street rose into the closing bell following a morning lull, encouraged by rosy data on unemployment claims. Those numbers helped to temper some risk aversion ahead of tonight’s highly anticipated US non-farm payrolls report—which is likely to influence short-term economic forecast and alter the Fed’s perceived rate hike path. Analysts expect to see the US add 323k jobs in May, according to a Bloomberg survey.

Other Asia-Pacific currencies, such as the New Zealand dollar, were also stronger overnight. Australia’s trade data from yesterday surprised analysts, with its surplus rising more than expected, helping to cool fears over a slowdown in economic growth throughout the region. The slowdown in bond selling seems to support that view, although the global economic outlook remains highly precarious as central banks attempt to tamp down inflation.

Moreover, the rebound in oil prices, following a decision by OPEC+ to increase production, also supports the market’s view that the odds of a recession may be waning. The oil cartel and its allies, on Thursday, announced that they would increase production by 648,000 barrels per day in July and August. The move comes amid soaring gasoline prices, perhaps stoking fears among members that those high prices may induce demand destruction, which may already be occurring in the United States.

Elsewhere, metal prices, particularly copper, rose sharply. The price of copper in New York increased more than 5% to its highest level since April 25. An announcement from Chile’s government stated that copper production has dropped across its state-owned mining enterprises on a year-over-year basis. China’s recent rollback of Covid restrictions provided a solid base for the supply-side news to drive prices higher. APAC traders will be monitoring home loans data out of Australia, set to cross the wires at 01:30 GMT.

AUD/USD technical forecast

AUD/USD is battling the May swing high after rising above its 200-day Simple Moving Average (SMA) overnight. Prices vaulted higher from the 38.2% Fibonacci retracement shortly after the MACD oscillator crossed above its centerline. A former level of support at the 61.8% Fib level may provide the next level of resistance if prices continue to rise.

AUD/USD daily chart

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