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Thomson Reuters
Dec 07 - 02:36 PM
AUD/USD - COMMENT-AUD/USD Weak Despite Pared-Back Fed Expectations
First appeared on eFXplus on Dec 07 - 12:15 PM

AUD/USD gains remain elusive even in the wake of disappointing U.S. payrolls data.
Indeed, November NFP, AHE and average workweek hours surprised to the downside.
The below forecast data reinforced market expectations for a less aggressive Fed which is weighing on the greenback, but not benefiting AUD/USD.
This because, although U.S. Treasury yields remain heavy, Australian government bond yields have fallen to new trend lows, once again leading to wider Australian-U.S.
spreads.
Therefore, the greenback's yield advantage over aussie has grown, which is helping to depress AUD/USD.
Thus, the pair could be on the verge of extending its recent slide as the 50 percent Fib of 0.7021-0.7394, the daily cloud top, November 13 low and 55-DMA are threatened.
A reversal in the trend of Australian yields, eroding the greenback's advantage, is needed to change AUD/USD's current direction.
However, that reversal may be challenging unless the outlook for Australian and Chinese economic growth becomes more upbeat.
Additionally, bulls could also face trouble if the Fed's rhetoric out of its December meeting is not more cautious.
Should the 0.7164 November 13 trough give way, AUD/USD's recent rally can be considered complete and its 2018 low would then be at risk.

chart: Click here

Source:
Thomson Reuters IFR Markets

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