The Australian dollar against the US dollar continues to test the 73rd figure. Since mid-August, the AUD/USD pair has been regularly trying to consolidate in this price area, but it failed. A more or less successful attempt was made in early September, when the Australian currency settled above 0.7300 for several days and even tested the 74th figure. However, its growth was firstly, temporary and secondly, it was due only to the weakness of the dollar. As soon as the US dollar began to regain its lost position, the AUD diligently followed.
Today, AUD/USD buyers are also taking advantage of the vulnerability of the US currency; however, the Australian currency also has its own arguments for growth. For example, a rather optimistic minutes of RBA's last meeting was published yesterday. In view of this, the regulator positively assessed the growth prospects of the national economy and assured the market that it is not going to reduce the interest rate.
In addition, the AUD received support from China, despite the fact that relations between this country and Australia remain tense. However, it is still Australia's largest trading partner, so any signs of a recovery in the Chinese economy are positive for the Australian currency. Thus, China's volume of industrial production in August increased by 5.6% in annual terms, which is the strongest growth rate since December 2019. At the same time, experts expected to see this figure much lower, at around 4.9%. The volume of investments in fixed assets also increased. This indicator, which demonstrates the dynamics of long-term investment activity in the country, also entered the "green zone".
The commodity market also provides additional support to the Australian dollar. In particular, the cost of iron ore continues to hold above $ 110 per ton. According to the latest data, iron ore futures on the Dalian Commodity Exchange rose 5.8% to $ 128 per ton: raw materials rose in price by more than 15% over the month, amid strong demand from China.
If all of the above factors are supported by the growth of the Australian labor market, then the AUD/USD pair will not only consolidate within the 73rd figure, but will exceed the level of 0.7400 again, which is currently the main resistance level.
The key indicators are scheduled to be released tomorrow. It should be noted that preliminary forecasts are negative. The unemployment rate should rise to 7.7%, and the number of employed should decline by 40 thousand. However, even in this "negative" form, this indicator can support the Australian dollar. For example, the number of employees increased by 114 thousand in July (instead of the forecared 30 thousand), but this fact was skeptically received by market participants. The structure of the release showed that the growth in the number of employees was primarily due to part-time employment, whereas full employment showed a more modest result (ratio 71/43). RBA reports have repeatedly indicated that full-time positions tend to offer a higher level of wages and a higher level of social security, compared to temporary part-time jobs. Therefore, the market reaction to tomorrow's release may be, at first glance, strange. A month ago, AUD/USD traders reacted negatively to Australian Nonfarms, although the values went into the green zone.
On the other hand, the market may show "leniency" to the decline in the number of employees in August. The fact is that the largest state in the country was effectively blocked last month, and strict quarantine and a curfew were imposed in Melbourne. Such drastic measures could affect the dynamics of key indicators, so the majority of traders are probably ready for the Australian labor market to "sink" in August. At the moment, quarantine restrictions are gradually weakening in Victoria, and the dynamics of the spread of COVID-19 in this state (as well as in the country as a whole is steadily decreasing). If in August the daily increase in the number of infected people was in the hundreds, then yesterday the cases did not reach 40.
Tomorrow's release contains a lot of obstacles. A negative result can be ignored by the market, while on the contrary, positive values may disappoint traders. It is also worth considering that the AUD/USD pair will be trading tomorrow under the impression of the September Fed meeting, the results of which will be announced tonight. But if the results are just the same, and Powell announces what was already said earlier, then the AUD/USD traders will fully focus on the "Australian Nonfarms."
From the technical point of view, the pair retains the priority of long positions. The Ichimoku trend indicator on the daily chart has formed a bullish signal "Parade of Lines", and the price itself is located between the middle and upper lines of the Bollinger Bands indicator. The goal of the upward movement remains the same - the level of 0.7400 (the upper line of the above indicator). However, it is advisable to make trading decisions based on the results of tomorrow's release.