Heading into the New York session, the Australian dollar recovered some ground against a soft US dollar after strong labour market data came in from Australia this morning.
The Australian economy surprisingly added 39.9K jobs in November, marking a huge beat in market forecasts which were set at a 14.5K increase. The unemployment rate dropped to 5.2% from 5.3% recorded the month before.
Besides on the back of a robust labour market, the Australian dollar recently surged after de-escalation of US-China trade tensions provided strong tailwinds for the currency, which has risen as much as 2.60% against the US dollar since early December.
Today’s employment report might provide the Reserve Bank of Australia with some breathing space after the bank acknowledged the need for further rate cuts in the minutes of the December meeting. Recall that Australian Q3 GDP disappointed with a 0.4% growth, missing forecasts of a 0.5% raise, and October retail sales came in flat at 0.0%.
From the United States, markets are awaiting the Philly Fed Manufacturing Index which is expected to come in at 8.1 index points in December, down from the November reading of 10.4 points.
So far, the US dollar seems unwilling to react on news that the House of Representatives impeached President Trump on two counts, which makes Donald Trump only the third president in US history to be impeached.
Technical levels show a retracement of the recent downturn in the AUD/USD pair at the 38.2% Fib level which aligns with a strong horizontal support zone on the daily chart. The Australian dollar looks well supported above the 0.6840 level at the moment. As of 12:00 p.m. London time, the pair traded at 0.6873.
